Australian Dollar rises 0.17% to 0.7176 as traders price in RBA tightening despite stronger US inflation data.
The Australian Dollar extended its rally for a third session, climbing 0.17% to 0.7176 against the USD. The move came despite a hotter-than-expected US Core PCE inflation print, which kept Fed rate hike expectations elevated for late 2026.
US Core PCE inflation held steady at 3.3% YoY in July, matching forecasts but failing to ease concerns about persistent price pressures. The headline figure remained at 3.7% YoY, above the 3.6% estimate. Markets now price a 70% chance of a Fed rate increase by December 2026, while the US Dollar Index rose 0.23% to 99.13.
Meanwhile, Australia’s trimmed mean inflation exceeded estimates in July, fueling speculation the RBA may tighten policy further. The divergence in central bank expectations supported the AUD, offsetting broader USD strength.