AUD Rises on RBA Hawkish Outlook; Waller Speech in Focus

The Australian dollar strengthened broadly against major currencies on Thursday, buoyed by an upside surprise in previously released Australian inflation data that fueled expectations the RBA will maintain its tightening bias. As of press time, AUD/USD traded around 0.71939, extending its recent upward momentum. The US dollar index pulled back from highs, lending additional support to the Aussie.

**Hawkish Expectations and a Weaker USD Form Twin Support**

Australia's inflation data released on Wednesday came in above forecasts, prompting markets to reprice the RBA's rate path. According to Citigroup analysts, given the dual pressures of accelerating inflation and a tightening labor market, the RBA is still likely to maintain its hiking stance. Meanwhile, in the US, former Fed Governor Kevin Warsh has been confirmed as the nominee for the next Fed chair, but his historically hawkish views on the balance sheet have raised concerns about a steeper US Treasury yield curve. The dollar, after an initial broad rebound, came under renewed pressure, giving the Aussie a relative advantage.

**Technicals Reinforce Bullish Bias**

On the charts, AUD/USD has broken above a key resistance level on rising volume, with moving averages aligning bullishly. The 50-day moving average has crossed above the 200-day moving average, forming a "golden cross" pattern. According to DBS Bank analysis, the repricing of RBA rate hike expectations is supporting the pair toward the 0.7275 area. However, market sources note that strong resistance sits near 0.7200, and short-term price action could turn choppy.

**Focus Shifts to Waller Speech and Policy Signals**

Market attention now turns to upcoming remarks from Kevin Warsh, as investors seek further clues on the future path of US monetary policy. Overnight index swaps show markets have slightly raised their expectations for cumulative US rate cuts this year to 0.51 percentage points. However, Warsh's hawkish stance on the balance sheet could influence long-term rate expectations. If his comments reinforce a steeper yield curve trend, the dollar's downside may be limited, which in turn could affect the pace of the Aussie's advance.