AUD Tumbles After RBA Governor Lowe's Speech Fails to Hike Expectations

The Australian Dollar's recent performance has been influenced by Reserve Bank of Australia (RBA) Governor Phil Lowe's speech in Sydney, which failed to provide a clear indication of future interest rate hikes. The currency traded just below $0.70 on Tuesday, down around 0.25% from the previous day.

The RBA's Governor emphasized that underlying inflation remains high and could rise further due to war-driven energy costs, but traders were deterred by his questioning of whether this year's three hikes have already done the job. This led to a repricing of the August meeting, with traders marking down the 11th.

The key figure for the Australian Dollar is the second-quarter Consumer Price Index (CPI), which will be released on Wednesday at 1:30 GMT. A print near 0.9% for the quarter would lift the annual pace toward 3.7%, pushing the currency above the top of the 2-3% target band.

The market has already pre-committed to an answer, and a quarterly trimmed mean nearer 0.8% would take the annual pace back toward 3.5%, vindicating the recent repricing. This would kill the domestic meeting and hand the currency over to the US Dollar until mid-August.

The Australian Dollar's performance is also influenced by its major trading partners, including China, which is Australia's largest trading partner. The health of the Chinese economy has a direct impact on the value of the Australian Dollar, with positive or negative surprises in growth data affecting its value.