AUD Tumbles as Hot Inflation Data Meets Stronger USD
The Australian Dollar (AUD) fell against the US Dollar (USD) on Wednesday, as hot inflation data from Australia was met with a stronger USD. The AUD/USD exchange rate dropped to around 0.7170 after the release of the Consumer Price Index (CPI) data for July, which showed a monthly increase of 1% and an annual rate of 3.5%. This was higher than the forecasted 0.8% monthly increase and 3.2% annual rate.
The trimmed mean measure of the Reserve Bank of Australia's (RBA) preferred core gauge rose 0.5% on the month and held at 3.6% year-over-year, also above the 3.5% forecast. The US Dollar Index received a modest lift due to the higher-than-expected Personal Consumption Expenditure (PCE) inflation rate of 3.7%, which was above the consensus estimate of 3.6%. The core PCE Price Index remained steady at 3.3%.
A report on an Oman-Iran deal concerning the Strait of Hormuz also contributed to a calmer risk sentiment, but this had little impact on the AUD/USD exchange rate. Technical analysis shows that the pair is still holding a constructive bullish tone, with the Relative Strength Index (RSI) around 60 in positive territory.