AUD Slips Against USD as CPI Data Fails to Spark Rate-Hike Bets
The Australian Dollar (AUD) has slipped as the US Dollar (USD) steadied following the release of the Consumer Price Index (CPI) data. The USD initially fell after the CPI came in largely as expected, with headline inflation rising 0.1% on the month and 3.4% year-over-year, matching forecasts.
The core annual rate eased to 2.5%, just below the 2.6% consensus. This reading has tempered rate-hike bets, but the market's dovish read on the Fed may be reinforced by Thursday's Producer Price Index (PPI) data, which is expected to show a sharp slowdown in core prices.
TD Securities believes that the July inflation report will continue to bring relief to the Federal Reserve regarding the need for tighter policy. The bank points to signs of normalization in services prices and controlled tariff pass-through as indicators that the Fed may hold its policy stance unchanged this year, at least in the near horizon.