AUD/USD extended gains for a second day, rising to around 0.7170 after Australian inflation data, and it stayed near the highest level since early June reached last Friday. Australia’s ABS said the headline CPI increased 3.5% year on year in July, easing from 3.8% previously, while still above the 3.2% consensus; the figures kept expectations alive for further RBA policy tightening. Traders are now turning to the US PCE Price Index for the next catalyst.
Fed Policy Expectations and Market Impact
The US dollar remained subdued as markets priced lower odds of an immediate Fed rate rise, in the context of softer July US inflation data and expectations of a hold at the 15–16 September meeting. US bond yields also drifted lower, with a CNBC report indicating the Treasury could deploy nearly $1 trillion to help fund increased buybacks of longer-dated bonds announced last week, while falling oil prices reduced inflation concerns. Technically, the pair is holding above the 100-period SMA on the four-hour chart at 0.7085, with that level flagged as immediate support and a pivot for the near-term recovery.
