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.

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.