• USD recovered after signs of sticky inflation on July's PCE.
• Recovery momentum in AUD throughout August has been supported mainly by the weak USD and improved conditions of risk-related assets.
• RBA's hawkish stance continues to benefit the Aussie.

The AUD/USD declined by 0.70% to 0.6750 in Friday's session as the USD strengthened in response to July's Personal Consumption Expenditures (PCE) figures. Despite this, the Reserve Bank of Australia's (RBA) hawkish stance may limit further declines in the AUD.

Despite a complex economic outlook for Australia, the RBA has taken a rigid stance in response to persistent inflation. As a result, financial markets now anticipate a modest 25-basis-point reduction in interest rates by 2024.