Warsh's Hawkish Tone Sinks Aussie Dollar, Boosts US Dollar Expectations

Audrey Warsh, Federal Reserve Chair, reinforced the US central bank's commitment to price stability and brought inflation sustainably back toward the 2% target in a recent speech.

The hawkish comments from Warsh triggered a significant repricing of monetary policy expectations, with markets assigning around a 60% chance to an interest-rate hike at the Fed's September meeting, up from roughly 36% before Warsh's speech.

This shift in expectations supports the US Dollar and puts downward pressure on AUD/USD. The Australian Dollar, which had reached its highest level since mid-May earlier in the day, fell by 0.30% to trade around 0.7170 at the time of writing.