AUD Tumbles to Near 0.7150 as US Inflation Data Boost Fed Rate Hike Expectations
The Australian Dollar (AUD) has declined to near 0.7150 against the US Dollar (USD), following strong inflation data from the United States that boosted expectations for a Federal Reserve interest rate hike next week.
According to the Bureau of Labor Statistics, the Consumer Price Index (CPI) rose by 0.4% in August, with a 12-month increase of 3.4%. This was in line with market consensus.
The core CPI, which excludes volatile food and energy prices, increased by 0.3% on a monthly basis and 2.4% on a yearly basis. These numbers reinforced the case for a Fed rate hike next week, with financial markets initially pricing in an 86.2% odds of a quarter-point rate hike.
The Reserve Bank of Australia (RBA) Assistant Governor Sarah Hunter said that the central bank may need to raise interest rates again if inflation proves more persistent than expected. This hawkish tone from the RBA might help limit the AUD's losses.