Australian Dollar Rallies as US Dollar Tumbles After Fed Meeting

The Australian Dollar rallied despite softer inflation data in Australia, while the US Dollar tumbled after the Federal Reserve meeting and weaker-than-expected economic growth.

Australia's Consumer Price Index (CPI) slowed to 3.8% YoY in June from 4% previously, below market consensus of 4%. The softer reading prompted investors to scale back expectations of a near-term Reserve Bank of Australia rate hike, with Reuters reporting market pricing for an August increase dropped from nearly 21% to around 3-4%.

However, the Australian Dollar reversed higher as the US Dollar weakened following the Federal Reserve meeting and softer-than-expected macroeconomic releases in the United States. The US economy expanded at an annualized rate of 1.5% in the second quarter, missing market expectations of 2.1%. Inflation data also showed a continued disinflation process in the United States.