Australian Dollar edges higher after Australian CPI; focus shifts to Trump’s SOTU speech

AUD/USD attracts some buyers during the Asian session, though it lacks bullish conviction.
The monthly Australian CPI print backs the RBA’s hawkish stance and supports the Aussie.
Traders, however, seem hesitant amid trade uncertainties and ahead of Trump’s speech.

Haresh Menghani FXStreet

The AUD/USD pair edges higher following the release of the latest Australian consumer inflation figures, though it lacks follow-through buying and remains confined in a familiar range held over the past two weeks or so. Spot prices currently trade around the 0.7075-0.7080 region, up over 0.20% for the day, as the market focus now shifts to US President Donald Trump's State of the Union address.

Trump’s address comes on the back of the economic uncertainty driven by his far-reaching tariffs, some of which were struck down by a Supreme Court ruling last week. The most closely watched portion of the speech will almost certainly involve Iran amid the risk of a US military strike. This, in turn, will play a key role in driving the broader market sentiment, which would influence demand for the safe-haven US Dollar (USD) and provide some meaningful impetus to the risk-sensitive Australian Dollar (AUD).

In the meantime, the Australian Bureau of Statistics (ABS) reported that Australia’s Consumer Price Index (CPI) climbed 3.8% YoY in January, coming in above the 3.7% expected and matching the previous month's reading. The data backs the Reserve Bank of Australia's (RBA) hawkish stance and provides a modest lift to the Aussie. The USD, on the other hand, preserves the previous day's modest gains and remains close to the monthly peak, touched last week. This might keep a lid on further gains for the AUD/USD pair.

Economic Indicator

President Trump speech

Donald J. Trump is the 47th and current President of the United States. Before entering politics, he was a businessman and television personality. He became president for the first time in January 2017, representing the Republican party. His second mandate started in January 2025.

GBP/USD extends the drop to 1.3360

GBP/USD builds on Monday’s decline and briefly clinches five-day lows near 1.3360 on Tuesday. Cable’s extra pullback follows the better tone in the Greenback as uncertainty in the Middle East prompts investors to adopt a cautious stance. Meanwhile, an apathetic UK labour market report also collaborates with the selling pressure on the British Pound.

EUR/USD holds gains above 1.1400 on hawkish ECB expectations despite US-Iran tensions

The EUR/USD pair trades with mild gains around 1.1405 during the early Asian session on Wednesday. A hawkish tone from the European Central Bank provides some support to the Euro against the US Dollar. Traders await the upcoming ECB interest rate decision on Thursday.

Gold hits two-week highs above $4,100 despite widening Mideast conflict

Gold hits two-week highs above $4,100 in the Asian session on Wednesday. The bright metal seems to ride the optimistic wave that diplomatic efforts are underway. However, concerns about energy-driven inflation risks continue to fuel Fed rate-hike bets. They could act as a tailwind for the US Dollar amid widening US-Iran tensions, which, in turn, could cap the bullion.

The market runs back into AI despite higher Oil and yields

World stocks surged as traders made a spirited return to the market’s commanding centre of gravity, piling back into semiconductors, AI leaders and momentum, with the enthusiasm of a crowd rushing through the one door it still trusts. The Nasdaq led Wall Street higher, semiconductor shares jumped more than 5%, and momentum staged its strongest rebound in years.

The Iranian war has again risen

The Iranian war has again risen to the top of the economics factor list. There is no end in sight. Intelligence experts say the current level of offense/retaliation will not change minds in Tehran, while in Washington, Trump fears all-out war, which would mean boots on the ground.

US Dollar mid-year outlook: Exceptional currency, exceptional risks?

The US Dollar enters the second half of 2026 in a markedly different position from a year ago. The King currency has recovered, reflecting persistent US inflation, changing expectations for Fed policy, geopolitical tensions and renewed demand for defensive assets.