Aussie Edges Lower as CPI Looms

2026-05-26 01:58 By Joshua Ferrer 1 min. read

The Australian dollar edged lower around $0.71, but stayed near a one-week high as renewed US strikes on Iran dampened hopes for a peace deal, while investors awaited key domestic inflation figures.

April CPI data due Wednesday is expected to show consumer prices rising 0.6% month-on-month, with annual inflation easing slightly to 4.4% from 4.6%, largely due to a government fuel tax break.

However, the Reserve Bank's preferred trimmed mean measure is forecast to accelerate to 3.4% annually from 3.3%, reflecting rising transport and logistics costs across a broad range of industries.

A stronger inflation reading could strengthen the case for further policy tightening, although markets currently assign only a 10%-12% chance to a 25-bp rate hike in June, while the odds of an August increase stand near 50%.

Elsewhere, oil prices advanced after reports of fresh military strikes in Iran clouded prospects for an interim agreement between Tehran and Washington to reopen the Strait of Hormuz.



News Stream
Aussie Edges Lower as CPI Looms
The Australian dollar edged lower around $0.71, but stayed near a one-week high as renewed US strikes on Iran dampened hopes for a peace deal, while investors awaited key domestic inflation figures. April CPI data due Wednesday is expected to show consumer prices rising 0.6% month-on-month, with annual inflation easing slightly to 4.4% from 4.6%, largely due to a government fuel tax break. However, the Reserve Bank's preferred trimmed mean measure is forecast to accelerate to 3.4% annually from 3.3%, reflecting rising transport and logistics costs across a broad range of industries. A stronger inflation reading could strengthen the case for further policy tightening, although markets currently assign only a 10%-12% chance to a 25-bp rate hike in June, while the odds of an August increase stand near 50%. Elsewhere, oil prices advanced after reports of fresh military strikes in Iran clouded prospects for an interim agreement between Tehran and Washington to reopen the Strait of Hormuz.
2026-05-26
Australian Dollar Holds Ground
The Australian dollar held above $0.71, trading near a one-week high as optimism over a potential US-Iran deal sent oil prices lower and supported risk appetite. Negotiations have reportedly centered on extending the ceasefire for roughly two months, during which the US would lift its blockade while Iran would allow shipping through Hormuz to resume. However, President Trump warned that the US could go back on the offensive if their discussions fall apart. In Australia, expectations of further monetary tightening by the Reserve Bank weakened after a surprise rise in the jobless rate. The unemployment rate unexpectedly rose to 4.5% in April from 4.3% in March, the highest level in about four and a half years. Markets are currently pricing in a 12% probability of a 25-basis-point rate hike at the June 16 meeting, with the odds rising to around 50% for August and 80% by September. Traders now await this week's upcoming key inflation numbers for further clues on the policy outlook.
2026-05-25
Aussie Dollar Set for Second Weekly Fall
The Australian dollar depreciated to around $0.71 on Friday after a steady performance in the previous session, as a surprise rise in the unemployment rate dampened expectations for further interest-rate hikes. Australia’s seasonally adjusted unemployment rate edged up to 4.5% in April 2026, exceeding both March’s figure and market expectations of 4.3%, and marking the highest level since November 2021. Employment unexpectedly declined by 18,600 to 14.74 million, representing the first drop since November 2025. The weak labor market data prompted investors to scale back expectations that the Reserve Bank would raise the cash rate to 4.6% in June following three consecutive rate hikes. Meanwhile, consumer inflation expectations eased to 5.6% in May from April’s three-year high of 5.9%, although concerns over persistent price pressures remained amid rising oil prices linked to the Iran conflict. For the week, the currency is on track for a second consecutive weekly decline.
2026-05-21