Fed’s Cook says inflation has stayed too high for too long

Fed Governor Lisa Cook spoke on Wednesday regarding the persistent high inflation that has plagued the economy. She expressed her commitment to bringing inflation back in line with the Federal Reserve's 2% target, all while safeguarding the health of the labor market. Cook made her remarks during a conference in North Carolina, following the release of August's headline and core Personal Consumption Expenditures figures, which remained unchanged from the prior month.

Despite her comments, market expectations for interest rate hikes remained largely unchanged. Money markets currently view a 62% probability of the Fed maintaining rates steady, with a 38% chance of a 25-basis-point increase, according to Prime Terminal. The US dollar emerged as the strongest currency against major peers, with a notable impact on the AUD/USD pair, which slipped to the mid-0.6900s, the lowest level since late July.

The AUD/USD decline was further fueled by weak inflation data in Australia, leaving the currency pair exposed to additional downward pressure. On Thursday, traders will be closely watching the release of the August trade balance report. The US dollar's losses were also capped by gains in the Japanese yen, driven by hawkish Bank of Japan expectations and intervention risks.

Meanwhile, gold retreated towards the $4,150 region per troy ounce, as the US dollar trimmed some of its daily losses amid mixed Treasury yields. The Euro fell to its lowest level since May 2025, but a potential fresh inflation shock in the Eurozone could provide the currency with an unexpected boost.