AUD Slips to Nine-Week Low as Inflation Data Disappoints Markets

The Australian dollar (AUD) slipped to a nine-week low on Wednesday as inflation data came in just under forecasts, leading markets to reassess their bets on another rate hike. The miss was marginal but gave speculators an excuse to keep selling the currency after three straight weeks of falls.

The AUD eased 0.3% to $0.6963, bringing its losses this month to 2.8%. Data showed the consumer price index rose 0.4% in August, under forecasts of 0.5%, as drops in clothing and travel helped offset surging fuel costs.

The annual pace still accelerated to 4.0%, with prices up broadly. The trimmed mean measure of core inflation rose 0.2% in August, again under forecasts of 0.3%, but the annual pace held at 3.6% for a third straight month.

Markets had been wagering on a hotter inflation result, so the miss was enough to see the chance of another hike in November drop to 20%, from 36% before the data.

Abhijit Surya, a senior APAC economist at Capital Economics, said 'The RBA is likely to remain in wait-and-see mode in the near term, as it looks for confirmation that disinflation will in fact take hold over the coming months.'