FX.co ★ Aussie Dollar Remains Firm Amid Hawkish RBA Tone

The Australian dollar strengthened to around $0.71 on Wednesday, hovering near three-year highs after RBA Deputy Governor Andrew Hauser warned that inflation remains uncomfortably high. He stated that the central bank is prepared to tighten policy further if necessary to bring inflation back to its 2–3% target range, stressing that some price pressures are supply-driven and may prove persistent. Hauser also underscored that Australia’s economy is more diversified than just the resources sector, noting that domestic demand has remained resilient despite higher interest rates. His comments reinforced the RBA’s tightening bias, keeping the risk of another rate hike alive, most likely in May unless inflation data forces earlier action. Money markets currently assign a 74% probability to a May rate increase to 4.1%, and are pricing in a total of 38 basis points of additional tightening over the remainder of the year. At the same time, the Aussie, often seen as a proxy for China’s economy, came under some pressure after weaker-than-expected consumer inflation and continued producer price deflation in China pointed to softer demand for Australian exports.