The Australian dollar sank today after inflation data missed market expectations, fueling speculations about a potential interest rate cut from the Reserve Bank of Australia.
The RBA reported that the Consumer Price Index was unchanged in the March quarter of this year after rising 0.5% in the December quarter of the previous year. Market participants were hoping for at least a 0.2% increase. The trimmed mean CPI rose 0.3%, while economists were expecting the same 0.4% rate of growth as in the previous quarter. Year-on-year, the CPI was up 1.3%, while the trimmed mean CPI rose 1.6%. Both indicators advanced 1.8% in the December quarter of 2018 on an annual basis.
RBA officials have already dropped tightening bias, suggesting that a rate cut is as likely as a hike. The inflation miss increases chances for lower interest rates, and markets started to price in a cut later this year.
AUD/USD dropped from 0.7101 to 0.7043 as of 12:12 GMT today. EUR/AUD jumped from 1.5805 to 1.5915. AUD/JPY declined from 79.42 to 78.71.
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