As we moved towards US trading yesterday, there were some fears that the early gains in AUD/USD would dissipate. However, as the risk mood recovered strongly, the aussie's fortunes also improved and that sentiment is carrying over to today. The pair is up 0.2% to 0.7120 and is staying on approach to its August highs of 0.7125-36 at the moment.

A break above that resistance region will pave the way for a further upside move towards its May and June highs from last year at around 0.7265-83 next.

The stronger inflation data yesterday is helping to add fuel to the fire for the aussie's move higher, cementing a 25 bps rate hike in two weeks' time surely. After having seen the Bank of Canada decide to head to the sidelines after yesterday's rate hike, that is now the new benchmark for which major central banks will be pitted against.

For the aussie, the fact that equities are also holding some resilience on the week and hoping to stick with a technical breakout this week is also an added boon. The turnaround yesterday was encouraging and reflects buying appetite from earlier in the week here.