AUD/USD Hits 15-Month High as Inflation Data Forces RBA's Hand

SYDNEY — The Australian Dollar (AUD) has emerged as the clear leader in the G10 currency space, climbing to 0.6900 against the greenback, as a divergence in monetary policy expectations between Australia and the US widens significantly.

The Hawk vs. The Dove

Recent data has challenged the Reserve Bank of Australia's (RBA) neutral stance. Financial markets have aggressively repriced the policy trajectory, with major institutions like UBS and NAB adjusting forecasts. As the Fed looks to cut, Australia's unique cycle and yield differential are effectively removing downside risks for the currency.

• Inflation Gauge: TD-MI data revealed a sharp rise to 3.5% YoY in December.
• Labor Market: Unemployment rate dipped unexpectedly to 4.1%.
• Rate Expectations: Markets now assign a >50% probability to a hike at the February meeting.

Technicals

• Breakout: Pair cleared key resistance at 0.6750.
• Current Action: Testing the 0.6900 level; sustained close opens door to 0.7100.
• Indicators: RSI conditions are overbought, suggesting potential short-term consolidation.