Australian Dollar Sinks 1% After Inflation Misses Expectations

The Australian dollar sank today, losing about 1% of its value, after inflation data came out disappointing, eliminating hopes for an interest rate hike from the central bank.

The headline inflation index rose 0.6% in the September quarter from the previous three months (without seasonal adjustments), missing expectations of 0.8% growth, though accelerating from the 0.2% rate of increase in the June quarter. Underline inflation rose 0.4% (adjusted for seasonal variations), slowing from the 0.5% growth rate in the previous quarter, while experts had anticipated it to rise at the same pace. Year-on-year, both indicators rose 2.0%, and that was below expectations as well.

Ahead of the report, the Reserve Bank of Australia was showing no desire to start hiking interest rates, and that was weighing on the Australian dollar. After the report, chances for a hike in the foreseeable future are almost non-existent, making the Aussie even less appealing for investors. The RBA will make its next policy decision on November 7.

AUD/USD dropped from 0.7775 to 0.7702 as of 20:55 GMT today, touching the lowest level since July 13. EUR/AUD surged from 1.5120 to 1.5332, and its daily high of 1.5350 was the highest since June 2016. AUD/JPY slid from 88.55 to 87.61.

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