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Australian dollar slips for second straight day after softer inflation
AUD/USD was around 0.6970 in Asian trading after June CPI rose 3.8% year over year, and markets also weigh Middle East tensions and shifting Fed rate expectations.
The Australian dollar fell for a second straight day versus the US dollar, with AUD/USD trading around 0.6970 during Asian hours, after Australia’s latest inflation data cooled expectations for domestic rates. Australia’s CPI rose 3.8% year over year in June, down from 4.0% in May. The monthly CPI declined 0.1% compared with the prior 0.7% decrease, beating estimates for a 0.2% increase, while the RBA weighted median CPI increased 3.6% year over year. FXStreet noted that the outlook for AUD/USD could remain pressured as the US dollar gains support amid renewed Middle East hostilities, which have shifted investor focus toward inflation risks and the broader interest rate path in the United States. Iran fired ballistic missiles toward a US base in Jordan, and US military statements said the intercepted missiles were successful. Traders are also watching the Federal Reserve policy decision, where rates are widely expected to be left unchanged. Markets were pricing a 30.5% chance of an immediate rate hike, and a 76.6% probability of a rate increase in September, factors that can influence borrowing cost expectations for both the US and Australia.