Aussie Resilient as Hotter US Inflation Fails to Boost Dollar
Australia's currency held firm despite hotter-than-expected US inflation data that normally supports the US dollar. The Australian Dollar (AUD) is trading near recent highs, supported by the US dollar's failure to capitalize on its policy story.
The core Consumer Price Index (CPI) in the US rose 0.3% in August, its fastest pace since April and above the 0.2% consensus. This would normally weigh on the Australian dollar, but it has instead held its ground. The 2-year US Treasury yield, sensitive to Federal Reserve policy, pushed up to around 4.62%, a near-term interest rate hike.
Energy prices remain an inflation risk, with Brent Crude above $107 a barrel amid continued disruption around the Strait of Hormuz. The International Energy Agency (IEA) expects the global oil supply deficit to worsen this year, with inventories down 95 million barrels last month. A decisive Fed rate hike next week would give the US dollar its strongest support in weeks.
The AUD/USD pair is testing a nearby horizontal pivot at 0.7176 after failing to sustain recent gains. The Relative Strength Index (RSI) around 40 hints at fading bullish momentum, keeping the risk tilted modestly to the downside.