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Australian dollar slips under 0.7000 ahead of key inflation data
Traders have repriced the 11 August rate decision ahead of Wednesday's CPI, with the trimmed-mean quarterly forecast near 0.9% implying inflation could move well above the 2% to 3% target range.
The Australian dollar was trading just below 0.7000 on Tuesday, down about 0.25%, after a Reserve Bank of Australia Governor speech in Sydney offered little support for a near-term rate hike case.
FXStreet said the Governor emphasized that underlying inflation is still too high and could rise further as war-driven energy costs feed through, while also noting the board is prepared to tighten again if needed. The currency reaction was tied to how traders assessed whether the RBA’s three hikes this year have already done the job.
Market pricing into the 11 August meeting has been influenced by the upcoming CPI release, which lands about a day after that repricing. FXStreet highlighted that the calendar includes a second-quarter CPI with a monthly headline expected at 0.2% month over month versus -0.7% prior, and an annual rate expected to hold at 4%.
FXStreet added that the quarterly trimmed mean is the figure the RBA reads most closely, with forecasts near 0.9% that would lift the annual pace toward 3.7%, placing it roughly a full point above the RBA’s 2% to 3% target band. The outlet also noted that if the trimmed mean prints closer to 0.8%, it could pull the annual pace toward 3.5%, effectively reducing the odds of an August tightening path.