Australian inflation data exceeded forecasts, reinforcing expectations for further Reserve Bank of Australia tightening and lifting the AUD.
The Australian Dollar traded 0.1% higher at 0.7180 USD in European trading Thursday, extending gains on heightened Reserve Bank of Australia rate hike expectations. The move follows July’s Consumer Price Index report, which showed inflation cooling less than anticipated.
Headline inflation eased to 3.5% year-over-year from 3.8% in June, while trimmed mean inflation remained steady at 3.6%. Both figures surpassed market forecasts, signaling persistent price pressures. Analysts noted the RBA’s focus on trimmed mean inflation keeps policy tightening in play.
The AUD outperformed most major currencies this week, rising strongest against the Swiss Franc. Markets are pricing in a higher probability of another RBA rate increase as inflation remains above the central bank’s target range.