The Australian Dollar (AUD) reached a fresh three-month high, trading 0.13% higher at approximately 0.7217 against the US Dollar (USD) during the European session on Monday, marking its strongest level in over three months [1]. This surge is attributed to growing market confidence that the Reserve Bank of Australia (RBA) will raise interest rates at its upcoming policy meeting later this month, following the release of stronger-than-expected second-quarter Gross Domestic Product (GDP) data last week [1]. Rabobank analysts highlighted that the Australian economy demonstrated notable resilience, with Q2 GDP rising by 0.4% quarter-on-quarter and 2.1% year-on-year, figures that exceeded projections and, in their view, likely cement an RBA rate hike this month [1].
Investor attention is also turning to comments from RBA Deputy Governor Andrew Hauser, scheduled for Tuesday evening. According to strategists at the Commonwealth Bank of Australia, the AUD could remain near 72 cents for most of the week, particularly if Hauser adopts a hawkish tone, as reported by Reuters [1].
On the US side, the Dollar struggled to attract significant bids despite stronger-than-expected Nonfarm Payrolls (NFP) data for August, which revived expectations for a Federal Reserve (Fed) rate hike in September [1]. Commerzbank analysts noted that the probability of a 25 basis point Fed hike on September 16 increased to 62% from 51% following the employment report and dovish comments from Fed Governor Christopher Waller [1]. They emphasized that the strong employment report alleviated concerns about labor market weakness, making this week's Producer Price Index (PPI) and Consumer Price Index (CPI) reports the key remaining data ahead of the September Federal Open Market Committee (FOMC) meeting [1].
Technically, AUD/USD is trading at 0.7217, maintaining a bullish near-term bias as it remains well above the 100-day simple moving average (SMA) at 0.7079 [1]. The Relative Strength Index (RSI) is around 68, just below overbought territory, indicating strong bullish momentum but also suggesting a potential consolidation phase if new highs are not achieved [1]. Initial support is seen at the 100-day SMA, with dip-buying interest expected if this level holds, while a sustained break below could signal a broader corrective phase [1].
CONCLUSION
The Australian Dollar's rally to a three-month high is underpinned by robust GDP data and heightened expectations of an RBA rate hike. Market sentiment remains bullish, with technical indicators supporting further gains unless key support levels are breached. The focus now shifts to upcoming RBA commentary and US inflation data, which could influence the next moves for both currencies.