FX.co ★ Aussie Dollar Rises on Stronger CPI Print

The Australian dollar rose to approximately $0.661 on Wednesday, following a subdued trading session the previous day. This movement was influenced by investor reactions to a stronger-than-anticipated increase in August's consumer prices. The data revealed that headline inflation accelerated at its quickest rate in a year, although core inflation showed signs of easing, suggesting varied price dynamics. As a result, expectations remained that the Reserve Bank of Australia (RBA) would maintain interest rates at 3.6% during its September meeting, whilst the likelihood of a rate cut in November decreased to 60% from a pre-release probability of 70%. RBA policymakers have frequently emphasized the volatility of monthly CPI data, choosing to guide decisions with quarterly statistics. Earlier this week, Governor Michele Bullock expressed confidence that inflation is on course to meet the target, supported by a resilient labor market. Overall, the data indicated minimal urgency for immediate action, bolstering the central bank’s cautious approach to policy changes in the foreseeable future.