Australian Dollar Tumbles on Strong US Inflation Data

The Australian Dollar has declined to near 0.7150 against the US Dollar due to strong US inflation data, which has boosted the case for a Federal Reserve interest rate hike.

On Monday, the AUD/USD pair edged lower to around 0.7160 during the early Asian session, with the US Consumer Price Index (CPI) rising by 0.4% month-over-month in August and 3.4% year-over-year.

The core CPI, which excludes volatile food and energy prices, increased by 0.3% on a monthly basis and 2.4% on an annual basis, both of which were higher than market consensus.

Strategists at UOB Group note that their medium-term stance on AUD/USD remains intact, but they now expect the Aussie to decline towards 0.7120 due to increasing downward momentum.