AUD Surges as Strong Inflation Data Boosts Hawkish RBA Bets

The Australian Dollar (AUD) has rallied against the US Dollar (USD) by 0.2% to near 0.7185 as hotter-than-expected inflation data for July prompted hawkish Reserve Bank of Australia (RBA) prospects.

Brown Brothers Harriman notes that the AUD is 'outperforming' after the release of Australian Consumer Price Index (CPI) data, which showed a 1.0% month-over-month increase in headline CPI, exceeding the consensus estimate of 0.9%. On an annual basis, headline CPI eased less than expected to 3.5%, versus a forecasted 3.3%

RBA cash rate futures now almost fully price a 25bps hike to 4.60% by year-end, up from 60% before the July CPI data.