Dollar Recovery Lacks Conviction as Aussie Extends Rally Ahead of Warsh Speech

The US Dollar steadied on Thursday, but its recovery looks tactical rather than structural. The latest data had almost no impact on Fed pricing, and the September hike probability only moved from around 33% to 34%. This limited shift is more likely due to calendar-driven rebalancing flows and defensive positioning ahead of Fed Chair Warsh's speech at Jackson Hole.

The Aussie Dollar, on the other hand, extended its rally for a third straight session. NAB, CBA, ANZ, Goldman Sachs, and Citi all forecast another RBA hike this year. This shift is driven by new information, including RBA minutes discussing pre-emptive tightening, Trimmed Mean CPI holding at 3.6%, and resilient household spending.

The CAD strengthened as Brent recovered above $87 on fresh geopolitical risks. EUR and GBP slipped against a firmer Dollar, with Sterling additionally pressured as markets trimmed BoE hike expectations.