AUD/USD Surges on Hot CPI Data, RBA Rate Hike Bets Rise
The Australian dollar has surged against the US dollar following the release of hotter-than-expected Australian Consumer Price Index (CPI) data.
The AUD/USD pair jumped to a new level, marking a significant gain on the day.
This move was driven primarily by the inflation data, which showed annual inflation at 7.8% for September, exceeding market forecasts of 6.2%. This has fueled speculation that the Reserve Bank of Australia (RBA) may need to raise interest rates further to combat inflation.
A hotter inflation print suggests that the central bank's previous rate hikes have not yet fully tamed price pressures, leaving the door open for another hike at its next policy meeting.
The market now prices in a 73% probability of a 25-basis-point rate hike at the RBA's October meeting, up from 55% before the CPI release.