Australian Dollar Rises Toward Three-Year Highs On RBA Rate Hike Bets

AUD/USD remains stronger for the third successive session, trading around 0.7120 during the Asian hours on Thursday. The pair advances toward its three-year high of 0.7147, last touched on February 12, as the Australian Dollar (AUD) strengthens following hotter-than-expected inflation data from Australia, reinforcing expectations of further interest rate hikes by the Reserve Bank of Australia (RBA) this year.

Australia’s Consumer Price Index (CPI) increased 3.8% year-over-year YoY in January, unchanged from the previous reading but above market forecasts of 3.7%. On a monthly basis, CPI rose 0.4%, moderating from 1.0% previously. Meanwhile, the RBA’s Trimmed Mean CPI climbed 0.3% MoM and 3.4% YoY in January. RBA Governor Michele Bullock said on Wednesday that the economy is in a relatively strong position, though policy decisions remain challenging and require patience in assessment.

The AUD/USD pair also gained as the US Dollar (USD) came under pressure after US President Donald Trump’s State of the Union address on Tuesday night provided no signals of easing tariff measures.

Concerns persist over the White House’s uncertain economic policies. President Trump increased the newly introduced Section 122 tariffs to 10%, despite earlier threats of raising them to 15%, following the Supreme Court’s decision to strike down a series of country-specific tariffs enacted under IEEPA 10 months earlier.