AUD Dives as Inflation Miss Unwinds RBA Hike Bets
The Australian dollar sank to its lowest level since July as softer-than-expected inflation data unwound bets on an upcoming interest rate hike by the Reserve Bank of Australia (RBA).
The RBA's preferred measure, trimmed mean inflation, rose just 0.2% in August, falling short of expectations and sparking a sharp decline in the probability of a 25-basis-point hike at the next meeting on November 3.
The implied probability for such a hike now sits at just 20%, down from 44% last week, according to data from TradingView. This has led to a significant unwind in hawkish RBA pricing, with Australian three-year government bond futures staging a bullish breakout above resistance at 95.035.
The ASX 200 index, however, broke higher, clearing downtrend resistance drawn from the highs set in August, as investors buy into the rates unwind.