AUD/USD extends its bull run for the fourth day in a row on Wednesday, reclaiming the area above the key 0.6600 barrier, always amid the persistent offered stance in the US Dollar as investors gauge the impact of the recently announced US federal government shutdown.

The Australian Dollar (AUD) halted its strong recovery on Wednesday, prompting AUD/USD to keep its trade around the 0.6600 region following a brief knee-jerk below that key level.

The pair's U-turn came from a vacillating US Dollar (USD), which managed to set aside the initial bearish tone despite mixed US data releases and increasing uncertainty after the recently announced US federal shutdown.

Australia's economy keeps showing more resilience than many expected. Final September numbers hinted at some cooling, although they remained above the 50 mark, meaning activity is still expanding.

The hard data has backed that story too. Retail sales jumped 1.2% in June, July's trade surplus widened to A$7.3 billion, and business investment picked up through Q2. GDP was steady, rising 0.6% quarter-on-quarter and 1.8% year-on-year.

The only soft spot has been jobs. The unemployment rate held at 4.2% in August, but employment shrank slightly, down 5.4K.

Inflation is proving sticky. August's Monthly CPI Indicator (Weighted Mean) accelerated to 3.0% from 2.8% in the previous month, while Q2 CPI rose 0.7% QoQ and 2.1% YoY.

That was enough for the Reserve Bank of Australia (RBA) to stick to a hawkish hold earlier this week, leaving the cash rate unchanged at 3.60% in a unanimous call exactly what markets were looking for.

Importantly, the statement quietly dropped earlier hints about potential easing. Policymakers flagged worries that the disinflation trend may be slowing after August's upside CPI surprise. They also cautioned that Q3 inflation could easily overshoot their 2.6% forecast.

Complicating things, the economy itself isn't rolling over. Real wages are creeping higher, asset prices are on the rise, and households are feeling richer a combination that makes it tough to justify cutting rates.

Governor Michele Bullock was careful in her press conference, stressing that policy remains data-dependent and decisions will be made one meeting at a time. She didn't close the door on rate cuts, but was clear they'll only come if supply-demand imbalances cool further.

For now, the quarterly trimmed mean CPI at 2.7% YoY in Q2 is the key gauge, and it's still inside the RBA's 2–3% comfort zone.

Markets adjusted quickly: futures now imply roughly 13 basis points of easing by year-end.

Source: Fxstreet