AUD Edges Up on Hawkish RBA Minutes, CPI Data Looms

The Australian Dollar (AUD) has strengthened against its major currency peers except the US Dollar (USD), driven by hawkish Reserve Bank of Australia (RBA) minutes from July's policy meeting. The RBA board members see an interest rate hike 'quite possible' if upside inflation risks materialize.

RBA officials discussed either raising the Official Cash Rate (OCR) by 25 basis points or leaving it unchanged at 4.35%. Despite this, financial market participants don't expect the Australian central bank to raise interest rates immediately.

The RBA's hawkish stance is based on several board members judging that upside inflation risks will crystallize. The Consumer Price Index (CPI) data for July, due out tomorrow, will be the next major trigger for the AUD.

Economists at Wells Fargo expect Australia's upcoming July CPI release to show headline inflation rising 1.0% in July, leading the year-over-year rate down to 3.4%, while trimmed mean inflation remains at 3.6% year over year.