Hawkish Bets Send Aussie Dollar Soaring Against Major Crosses
Australia's July inflation report has sent shockwaves through the market, sparking a surge in hawkish Reserve Bank of Australia (RBA) bets and propelling the Aussie dollar to new heights against several major crosses.
According to recent data, headline inflation rose 1.0% for the month, leaving the annual rate at 3.5%, while trimmed mean inflation printed a staggering 0.5% increase, leaving the annual rate unchanged at 3.6%. This accelerating inflation trend is putting pressure on the RBA to hike interest rates.
Market pricing for another RBA rate hike has ticked higher following the release, with a move by November now seen as close to a lock at just shy of 98%. The implied probability of an earlier move in September has also lifted from around 14% earlier this week to nearly a 50-50 bet.
The Aussie dollar is benefiting from these hawkish bets, breaking key levels against the EUR/AUD, GBP/AUD, and AUD/NZD pairs. Against EUR/AUD, the Aussie broke beneath support at 1.6260, leaving the pair trading at its lowest level since early June. In contrast, AUD/NZD has broken out of a falling wedge structure, pointing to potential retests of year-to-date highs.