AUD/USD eyes RBA rate hike as building approvals surge 10.5% m/m

AUD/USD is in focus ahead of a pivotal Reserve Bank of Australia decision, with markets pricing in the possibility of a third consecutive rate hike. Australian March building approvals surged 10.5% month-over-month, significantly exceeding the prior reading of +0.2%, while the year-over-year figure jumped 12%. Supporting the hawkish case, Australia's Monthly Inflation Gauge showed inflation rising again in April, reinforcing expectations for further monetary tightening. However, ANZ-Indeed Job Advertisements declined 0.8% m/m in April, an improvement from the prior -3.1% reading, suggesting some softening in the labor market. Commonwealth Bank of Australia tips the RBA to deliver a rate hike but warns that geopolitical tensions surrounding Iran make it a close call, with a split board expected. The strong building approvals data and persistent inflationary pressures support a bullish outlook for AUD, though geopolitical risks and a potentially divided RBA board introduce uncertainty. Traders should watch for the RBA decision closely, as a hawkish outcome could push AUD/USD higher, while a dovish surprise or escalating geopolitical tensions may cap gains.