On Monday (September 7), during the European session, the Australian dollar rose as much as 0.25% to around 0.7220 against the US dollar, a new high since May 15. Market expectations for a rate hike by the Reserve Bank of Australia this month have increased – Australia's second-quarter GDP grew at a quarterly rate of 0.4% and an annual rate of 2.1% (both exceeding expectations).

Australia's GDP exceeded expectations, locking in interest rate hike expectations.

Australia's Q2 GDP grew 0.4% quarter-on-quarter and 2.1% year-on-year (both exceeding expectations), leading Rabobank to say it has "essentially locked in a rate hike this month." The market is now focused on the speech by RBA Deputy Governor Hauser on Tuesday; a hawkish tone could push the Australian dollar further towards 0.7250. The Australian dollar may remain relatively strong in the short term, but its upside is limited by expectations of a US rate hike and global risk sentiment. Australia's Q2 GDP data exceeded expectations across the board, with both quarter-on-quarter and year-on-year growth rates better than market forecasts, significantly reinforcing the narrative of economic resilience. Rabobank explicitly stated that this result has essentially locked in the possibility of a RBA rate hike this month, and the market has quickly priced in more rate hike expectations, pushing the Australian dollar to near a three-month high against the US dollar. As a high-yield commodity currency, the Australian dollar benefits from both a relatively high interest rate differential and support from risk appetite. The market will now closely watch Deputy Governor Hauser's interview on Tuesday; a more hawkish signal could further push the Australian dollar towards 0.7250 or even higher. However, short-term upside is still constrained by rising expectations of a US rate hike and volatility in global risk sentiment. The Australian dollar's rally may slow if the US dollar strengthens due to subsequent data or if risk assets experience a pullback. Overall, strong GDP provides solid fundamental support for the Australian dollar, but external factors will still determine the sustainability and magnitude of its appreciation.

The US dollar was supported by non-farm payroll data but failed to strengthen significantly; inflation data will be key.

US non-farm payrolls exceeded expectations in August, adding 162,000 jobs, and the probability of a September rate hike rose to 62% (from 51% before the non-farm payrolls report), but the US dollar still failed to strengthen significantly. Commerzbank pointed out that the non-farm payrolls data eased concerns about the labor market, and this week's PPI and CPI data will be the most crucial inputs before the September FOMC meeting. If inflation data is moderate, the probability of a rate hike may decline, putting pressure on the US dollar and potentially allowing the Australian dollar to rise further; if inflation is overheated, rate hike expectations will solidify, the US dollar may strengthen, and the Australian dollar's gains will be limited. As a high-yield commodity currency, the Australian dollar has performed strongly, supported by both interest rate differentials and risk appetite. The significantly better-than-expected US non-farm payrolls data once pushed the probability of a September rate hike from 51% to 62%, easing market concerns about a cooling labor market. Commerzbank believes that this result provides the Federal Reserve with more policy flexibility, but the PPI and CPI data to be released this week will be the key inputs determining the outlook for the September FOMC meeting. Although the US dollar was supported by the data, it failed to strengthen significantly, reflecting that the market is still weighing the balance between employment resilience and the path of inflation. For the Australian dollar, if US inflation data is moderate, a decline in interest rate hike expectations will weaken the US dollar, thus opening up further upside potential for the Australian dollar. Conversely, if CPI is overheated, the logic for interest rate hikes will strengthen, supporting the US dollar and suppressing the Australian dollar's gains. In the short term, the Australian dollar is expected to fluctuate between 0.7150 and 0.7250 against the US dollar, awaiting guidance from both the Reserve Bank of Australia's official statements and US inflation data. As a typical high-yield commodity currency, the Australian dollar maintains a generally strong position supported by interest rate advantages and risk appetite, but the external trend of the US dollar remains a crucial variable determining its short-term performance.

Summarize

Australian GDP growth exceeded expectations, locking in interest rate hike expectations. The US dollar was supported by non-farm payroll data but failed to strengthen significantly; inflation data will be key. The Australian dollar is likely to trade in the 0.7150-0.7250 range in the short term, with attention focused on RBA Reserve Bank of Australia (RBA) Governor Hauser's speech and US inflation data. If Hauser is hawkish or CPI is moderate, the Australian dollar could move towards 0.7250; if Hauser is dovish or CPI is overheated, the Australian dollar may fall back to around 0.7150. As a high-yield commodity currency, the Australian dollar has performed strongly, supported by both interest rate differentials and risk appetite. (Australian dollar against US dollar daily chart, source: EasyForex) At 16:09 Beijing time, the Australian dollar was trading at 0.7222/23 against the US dollar.