AUDUSD Plunges Amid Soft CPI Data and US Dollar Strength

The AUD/USD (AUDUSD) currency pair plummeted on July 29, losing 0.57% to trade at $0.69335. This decline marks a 7-day drop of 0.88%. The primary driver behind the downward pressure on the Australian Dollar was the release of softer-than-anticipated consumer price index data for the second quarter.

Headline inflation and, more importantly, the RBA's preferred measure of underlying inflation, the trimmed mean, both decelerated more quickly than market participants had projected. This cooling of price pressures has led to a significant repricing of interest rate expectations.

The perceived narrowing of the interest rate differential between Australia and its G10 peers has stripped away a key support pillar for the currency. The Australian Dollar's weakness was compounded by a resurgent US Dollar as markets positioned themselves ahead of the Federal Reserve's policy announcement.