AUD Slips as US CPI Data Steadies Rate Hike Bets
The Australian Dollar (AUD) slipped on Thursday as it reacted to the release of the US Consumer Price Index (CPI) data. The CPI reading showed a 0.1% monthly increase and a 3.4% year-over-year rise, which was in line with expectations.
The US Dollar initially dipped after the release, but later steadied as investors tempered their bets on rate hikes. According to TD Securities, the inflation report 'should continue to bring relief to the Fed regarding the need for tighter policy, at least in the near horizon.' They noted that signs of normalization in services prices and controlled tariff pass-through bode well for concerns around sticky core inflation.
TD Securities reiterated that they remain of the view that the Federal Reserve will keep its policy stance unchanged this year. However, they cautioned that markets are still waiting on further data before the September meeting since the Fed has lowered the bar for a rate hike.