AUD Rebounds on Inflation Data, Eyes US Economic Indicators

The Australian Dollar (AUD) has rebounded slightly to around 0.6970 after a weak opening, following the release of the August Consumer Price Index (CPI) data from Australia.

The data showed inflationary pressures accelerated to 4% Year-on-Year (YoY), as expected, from 3.5% in July, which reinforced expectations of more interest rate hikes by the Reserve Bank of Australia (RBA) in the near term.

Analysts at Commerzbank argue that the latest inflation data underscore why market pricing for “1.5 additional rate hikes by the RBA” is likely, despite the central bank raising rates 100 basis points to 4.6% so far this year.