AUD Gains on Stronger Than Expected Aussie Inflation Data

The Australian dollar rose to around 0.7180 against the US dollar in early European trading, supported by firmer-than-expected inflation data from Australia's July CPI report.

CPI rose 1% month-on-month in July, beating forecasts of a 0.8% increase, and came in at 3.5% year-on-year, above the estimate but below the prior 3.8%. This has lifted expectations of another Reserve Bank of Australia rate increase this year.

The implied probability of a fourth RBA hike in September rose to 36% from 17%, while a move by February is priced at 94%. The July meeting minutes indicated several board members see a hike as 'quite possible' if upside inflation risks emerge.