AUD/USD jumps as hot inflation data sparks February RBA hike expectations

AUD/USD rallied 0.8% (55 pips) to 0.6480 after Australia's monthly inflation indicator surprised to the upside, printing at 2.3% year-over-year versus 2.1% expected. The stronger inflation pulse has dramatically shifted RBA rate expectations, with markets now pricing in a 45% probability of a 25-basis-point hike in February 2025, up from near zero just days ago. Core inflation measures also exceeded forecasts, with trimmed mean CPI rising to 3.5%, well above the RBA's 2-3% target band. This contrasts sharply with other major central banks' easing bias, creating a favorable interest rate differential for the Australian dollar. Technical analysis shows AUD/USD breaking above the key 0.6450 resistance level, opening the path toward 0.6520 and potentially 0.6550. The pair maintains strong bullish momentum above all major moving averages, with support now established at 0.6430.