AUD Surges on Hot Inflation Data, RBA Rate Hike Expectations Rise

The Australian Dollar has been outperforming after hotter-than-expected July Consumer Price Index (CPI) data lifted Reserve Bank of Australia (RBA) rate hike expectations.

Australia's July CPI inflation rose by 1.0% month-over-month, beating the consensus estimate of 0.9%, driven in part by automotive fuel and clothing.

The annual headline CPI inflation eased less than expected to 3.5%, while the trimmed mean CPI remained at 3.6%, tracking above the RBA's end-December forecast of 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.