AUD Slumps as Weaker CPI and Intervention Fears Sink Aussie Dollar

The Australian Dollar (AUD) slid on Wednesday due to softer-than-expected Consumer Price Index (CPI) data, which reignited fears of intervention in the foreign exchange market by Japanese authorities. The AUD/JPY currency pair traded around 113.60 at the time of writing, down 0.61% on the day.

The Australian Bureau of Statistics reported that the CPI rose 3.8% year-over-year (YoY) in June, missing the market consensus of 4%. The figure also marked a second consecutive monthly decrease, with the Trimmed Mean CPI increasing by 3.6% YoY. This moderation in underlying price pressures reinforced expectations that the Reserve Bank of Australia could keep interest rates unchanged at its upcoming meetings.

Investors scaled back their expectations for additional rate hikes this year, weighing heavily on the Australian Dollar. Meanwhile, the Japanese Yen (JPY) is attracting renewed demand amid speculation about potential intervention by Japanese authorities to support the domestic currency.