Aussie Surges as RBA Hike Expectations Soar
The Australian Dollar has strengthened against the US Dollar, rising by 0.3% to trade at 0.7129 on Friday.
This move is attributed to a shift in expectations for an upcoming interest rate hike from the Reserve Bank of Australia (RBA), following Governor Michele Bullock's testimony before a parliamentary committee.
Bullock highlighted rising oil prices, the global AI investment boom, and extreme weather as key pressures driving inflation risks. Market-implied odds of a September 29 RBA rate hike have surged to 93%, with the expected terminal rate now seen reaching 4.85% by early 2027.
The US Dollar itself also contributed to the Aussie's gain, softening on the day as Treasury yields eased following a previous session's post-Fed rally. This reduced the greenback's relative appeal, despite Fed Chair Kevin Warsh flagging further hikes possible.