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AUD/USD slides after softer Australia CPI shifts bets on RBA timing
June CPI eased to 3.8% year over year and trimmed mean stayed at 3.6%, pushing all four major banks to expect the RBA to stay on hold through year end.
Australia’s softer inflation data pressured AUD/USD lower and shifted market expectations toward a longer RBA hold. After the CPI release, the pair broke down from its rising channel, with 0.6750 flagged as the next major support cluster, according to Action Forex.
The June CPI print showed headline inflation slowing from 4.0% to 3.8% year over year, while trimmed mean inflation was unchanged at 3.6%. Quarterly readings followed the same direction, with headline inflation easing from 4.1% to 3.8% and trimmed mean rising only modestly from 3.5% to 3.6%.
Action Forex reports that the key point was the CPI versus the RBA’s own forecasts, with trimmed mean measures landing below the central bank’s May forecast of 3.8% on both monthly and quarterly bases. The outcome helped validate Governor Michele Bullock’s view that underlying inflation had evolved broadly as expected since May, while suggesting disinflation may be occurring slightly faster than policymakers anticipated.
The report also highlights a change in bank expectations, led by Westpac. Until the CPI release, Westpac was the only Big Four bank still forecasting an August rate hike, but it later dropped that call and now expects the RBA to remain on hold for the rest of 2026, with only a conditional risk of a November hike if inflation reaccelerates sharply in the third quarter.