AUD Surges as July CPI Beats Estimates
The Australian Dollar (AUD) continued its upward trend for the second consecutive day, trading at around 0.7180 during European hours on Wednesday. This gain can be attributed to the Consumer Price Index (CPI) climbing 3.5% year-over-year (YoY) in July, surpassing the estimated 3.2% growth.
The monthly CPI rose by 1.0% in July, a significant increase from the 0.1% decrease seen in the previous month. The Trimmed Mean CPI increased by 0.5% MoM in July and 3.6% YoY during the same period.
Analysts at MUFG note that market expectations for Australian policy tightening remain subdued, with a full rate hike not priced until February 2027. However, they argue that the latest central bank communication points to a more immediate risk profile, indicating a higher likelihood of another hike sooner than expected.