The AUD/USD pair extends the recovery near 0.6545 on Wednesday during the early European trading hours. The hawkish stance from the Reserve Bank of Australia (RBA) supports the Australian Dollar (AUD) against the Greenback. Investors will take more cues from RBA Governor Michele Bullock's speech on Thursday. 

The RBA left interest rates on hold at 4.35% for the sixth consecutive meeting at its August policy meeting on Tuesday. RBA’s Bullock emphasized that inflation will remain a problem for some time yet before inflation is sustainably in the target range. Bullock further stated that the Australian central bank might need to maintain interest rates higher for an extended period. The RBA’s hawkish guidance on interest rates might boost the Aussie in the near term. 

Elsewhere, the National Bureau of Statistics of China will publish the country’s Consumer Price Index (CPI) and Producer Price Index (PPI) for July. The CPI inflation is expected to rise to 0.3% in July from 0.2% in June, while the PPI is estimated to fall to 0.9% in the same report period. The worse-than-expected readings could raise the fear of an economic slowdown in China and weigh on the Aussie as China is Australia's largest trading partner. 

On the USD’s front, traders are now raising bets on a deeper rate cut by the Federal Reserve (Fed). According to the CME FedWatch Tool, the markets are now pricing in nearly 85% odds that the Fed will cut the rate by 50 basis points (bps) in September, up from only 11.5% last week. JPMorgan chief economist Michael Feroli noted that there is a "strong case to act before the next scheduled policy meeting on September 17-18. The rising speculation of Fed rate cuts might undermine the US Dollar and create a tailwind for AUD/USD. 

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