AUD Tests Resistance Amid Surprise Inflation Data

Australian inflation data has surprised to the upside, keeping alive the possibility of another interest rate hike from the Reserve Bank of Australia (RBA).

The Australian Dollar (AUD) is retesting resistance in the 0.7180-0.7200 range after markets fully priced an additional 25bp hike by February 2027, up from around a 70% probability beforehand.

According to OCBC Bank strategists Sim Moh Siong and Christopher Wong, Australian headline inflation eased from 3.8% YoY in June to 3.5% YoY in July, while trimmed mean inflation held steady at 3.6% YoY.

The RBA is targeting an average trimmed mean inflation rate of 3.3% YoY in 2H26, making July's reading an unhelpful start to the second half of the year, as stated by Sim Moh Siong and Christopher Wong.