Australian Dollar Hits Fresh Highs Before Hawkish Speech Sinks Gains

The Australian dollar reached fresh highs of 0.7208 against the US dollar and multi-year highs against several major currencies, but its gains were short-lived due to a hawkish speech from Fed Chair Kevin Warsh at the Jackson Hole symposium.

Stronger-than-expected July inflation data triggered a repricing of RBA expectations, driving the Australian dollar higher. However, after Warsh's speech, the US dollar rebounded, and AUD/USD fell back to 0.7156, unwinding the week's CPI-driven gains.

The Australian dollar was the only G10 currency to gain against the US dollar for the week, but its broader eight-week uptrend remains intact. The next phase may rely more heavily on domestic interest rate expectations and strength against other currencies rather than broad-based US dollar weakness.