AUD/USD Rallies on Surprise Inflation Jump, RBA Hawks Circle

AUD/USD surged 0.6% to 0.6845 following Australia's unexpectedly high inflation data, marking its strongest single-day gain in three weeks. The Consumer Price Index rose 3.5% year-over-year in Q3, exceeding forecasts of 3.2% and accelerating from Q2's 3.1%. Core inflation also surprised to the upside at 3.2% versus 2.9% expected. This data reinforces the Reserve Bank of Australia's hawkish stance and reduces expectations for near-term rate cuts, with markets now pricing only a 15% chance of easing by year-end. The Australian dollar outperformed all G10 currencies, breaking above key resistance at 0.6820. Technical indicators show bullish momentum building, with the next target at 0.6890 (September high). The inflation surprise contrasts sharply with other major economies seeing disinflation, potentially widening interest rate differentials in AUD's favor. Traders should monitor upcoming RBA communications for policy guidance.