The Australian dollar was little changed around $0.691, hovering near an eleven-week low after a mixed inflation report did little to alter expectations for further interest rate increases. Headline consumer prices fell 0.7% in May from the previous month, bringing annual inflation down to 4.0% from 4.2% and marking the slowest pace in three months. However, trimmed mean inflation rose 0.4% on the month, exceeding forecasts and pushing the annual core rate up to 3.6%.
Having raised interest rates three times this year, the Reserve Bank of Australia left the cash rate unchanged this month but reiterated that it would not hesitate to tighten further if inflation remains above its 2.5% target. The mixed inflation data have left markets divided, with pricing indicating roughly a 50% probability of another rate hike, now seen as more likely later in the year than at the August meeting. Meanwhile, the Aussie fell 1.2% in the previous session, as a tech-led global equity selloff spurred risk aversion.
