AUD/USD climbs after hawkish RBA remarks, rising Q3 inflation

• The Australian Dollar strengthens following hawkish comments from RBA's Andrew Hauser.
• Australia's inflation accelerates to 1.3% in the third quarter, confirming persistent price pressures.
• The US Senate approves a temporary funding bill, easing fears of a government shutdown.

AUD/USD appreciates toward 0.6520 on Monday at the time of writing, up 0.40% for the day. The Australian Dollar (AUD) gains momentum after Reserve Bank of Australia (RBA) Deputy Governor Andrew Hauser argued in favor of maintaining a restrictive monetary policy stance to reach the inflation target. Speaking at a UBS conference in Sydney, Hauser stated that policy must remain restrictive enough to "close the output gap," adding that the Australian economy continues to "run above its potential," leaving little room for near-term rate cuts.

Recent data support this view. The Australian inflation rose by 1.3% in the third quarter, compared to 0.7% in the previous one, according to the Australian Bureau of Statistics (ABS). This acceleration confirms that price pressures remain persistent, especially in the services and energy sectors.

The Aussie also benefits from positive signals coming from China, the country's main trading partner. China's Consumer Price Index (CPI) increased by 0.2% YoY in October after a 0.3% drop in September, while the Producer Price Index (PPI) decline moderated to 2.1%. These figures suggest a gradual improvement in domestic demand. In addition, Beijing's decision to temporarily lift its export ban on strategic metals such as Gallium, Germanium, and Antimony to the United States (US) until 2026 is seen as a sign of easing trade tensions, further supporting market sentiment toward the AUD.

In the United States, the US Dollar (USD) trades more steadily after several volatile days. The US Senate passed a stopgap funding bill that will keep the federal government open until January, reducing the risk of a prolonged shutdown. The US Dollar Index (DXY), which measures the Greenback's performance against a basket of six major currencies, is steady around 99.60.

Investors continue to assess the Federal Reserve's (Fed) monetary policy outlook. According to the CME FedWatch tool, markets assign around a 63% chance to another rate cut in December. Several Fed officials, including St. Louis Fed President Alberto Musalem and San Francisco Fed President Mary Daly, delivered cautious remarks, highlighting the resilience of the US economy while acknowledging the need to stay vigilant on inflation.