Dovish Fed and Yen Intervention Send AUD/USD Soaring

The AUD/USD currency pair closed its highest weekly level in seven weeks at 0.7030, up 0.67% from the previous week's close. This surge was largely driven by two significant events that offset the impact of a lower-than-expected domestic inflation report for June.

The US dollar took a hit after the Federal Reserve decided to keep interest rates steady at 3.50%-3.75%, with Fed Chair Kevin Warsh delivering dovish remarks that left markets uncertain about the Fed's path back to its 2% inflation target.

This ambiguity allowed Japanese authorities to intervene in the yen, buying it on both July 30 and 31, potentially amounting to ¥6 trillion-¥9 trillion. The US Treasury also reportedly joined in, conducting joint yen-buying intervention against the euro, a move not seen since June 1998.

The coordinated action supported the Australian dollar by pushing the yen to its strongest levels since early May and contributing to broad Big Dollar weakness.