Australian Dollar Weakens After Softer Q2 CPI Figures

The Australian dollar weakened across the board following the release of slightly softer Q2 CPI figures. The numbers showed that headline inflation eased to 3.8% y/y from 4.0%, while trimmed mean inflation slowed to 3.6% y/y, reinforcing a gradual disinflation trend.

Housing remained the largest contributor to annual inflation, with transport inflation easing sharply following lower fuel prices. The RBA's decision on August 11 may be influenced by these numbers, but the data suggest that policymakers will likely retain their hawkish bias without needing to raise rates in August.

The Australian dollar is currently trading at an 11-day low against the US dollar and has broken below a trendline on its 4-hour chart. Analysts predict that if the Fed leans into hawkish expectations, the US dollar could gain bullish traction and weigh further on AUD/USD.