FX.co ★ Aussie Dollar Holds Ground Despite Softer Inflation Print

The Australian dollar experienced a slight uptick, surpassing the $0.651 mark on Wednesday, thereby breaking its four-session decline. This improvement was largely attributed to a softer US dollar, which more than compensated for Australia's weaker domestic inflation data. The US dollar softened in anticipation of the Federal Reserve's policy announcement, with markets expecting interest rates to remain unchanged. However, there remained a degree of wariness among investors regarding potential signals of a rate reduction in September. In Australia, consumer prices in the second quarter increased at their slowest rate in over four years, with a headline CPI of 0.7% quarter-on-quarter and 2.1% year-on-year, while core inflation dropped to a three-year low of 2.7% year-on-year. These figures were below projections and comfortably within the Reserve Bank of Australia's (RBA) target range of 2–3%. The subdued inflation data bolstered dovish sentiments, prompting markets to fully expect a 25 basis point rate cut at the RBA's August meeting. On the trade front, uncertainty persisted as US Commerce Secretary Howard Lutnick confirmed there would be no postponement of President Trump's tariff deadline set for Friday, and separate negotiations with China concluded without achieving any progress on deferring further tariffs.