The Australian dollar (AUD) strengthened against the US dollar (USD) this morning after the latest inflation data from the TD Securities–Melbourne Institute (TD-MI) showed a higher-than-expected surge in consumer prices. The monthly inflation index rose 0.4% in September, reversing from a 0.3% decline in the previous month. Annually, inflation now stands at 3%, slightly above the upper end of the Reserve Bank of Australia's (RBA) target range of 2–3%.

This rise in inflation has fueled speculation that the RBA may reconsider its cautious stance on interest rates. Although the RBA held its benchmark interest rate at 3.6% at its meeting last month, it warned that price pressures, particularly in the services sector, remain stubborn. The market is now awaiting speeches by RBA officials this week for clues on the next policy direction.

Analysts predict that if this inflation trend continues, the likelihood of an interest rate hike in the coming months could strengthen. In addition to domestic factors, the weakening US dollar due to political uncertainty and the government shutdown has also provided additional support for the AUD.

With the combination of strong inflation data and unstable global sentiment, the AUD is currently enjoying positive momentum, at least in the short term, as long as there are no surprises from the RBA's policy direction. (az)

Source: Newsmaker.id