The Australian dollar today dropped sharply against the US dollar following the release of disappointing Australian consumer price index data in the Asian session. The AUD/USD currency pair gave up all its gains from an initial spike higher as investors anticipated positive inflation figures before the actual release.
The AUD/USD currency pair today spiked to a high of 0.7449 in the Asian session before dropping to a low of 0.7390 after the release.
The Australian inflation figures released by the Australian Bureau of Statistics were the main driver behind the currency pair’s decline. The headline CPI data missed expectations by coming in at a quarterly rate of 0.4% in Q2, which was lower than the expected 0.5% print. The annualized CPI print also disappointed by coming in at 2.1% versus the expected 2.2% print. Today’s downbeat CPI data solidified investors’ fears that the Reserve Bank of Australia had little incentive to hike interest rates in the near future. The latest CPI data also indicates that inflation is rising slowly and is now within the RBA’s target of 2â3% inflation.
The Reserve Bank of Australia’s Trimmed Mean CPI met expectations by coming in at a quarterly 0.5% and an annualized 1.9%, but could not reverse the pair’s decline. The Aussie was unable to capitalize on the bullish copper prices to reverse its decline, which accelerated its fall.
The currency pair’s short-term performance is likely to be affected by the action in the US dollar given the closure of Asian markets.
The AUD/USD currency pair was trading at 0.7408 as at 08:21 GMT having dropped from a daily high of 0.7449. The AUD/JPY currency pair was trading at 82.41 having declined from a high of 82.88.
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