Aussie Dollar Dips on Softer CPI Data

2026-05-27 02:35 By Joshua Ferrer 1 min. read

The Australian dollar edged down to around $0.71, easing from a recent one-week high as softer-than-expected inflation data reduced expectations of further rate hikes.

Data from the Australian Bureau of Statistics showed April's monthly CPI eased to 0.4% from a seven-month high of 1.1%, while the annual rate slowed to 4.2% from 4.6%, below forecasts of 4.4%, partly due to a government fuel tax cut.

However, underlying inflation remained sticky, with the trimmed-mean measure of core inflation rising 0.3% on the month, in line with estimates, and 3.4% year-on-year, marking the highest since late 2024 and further above the Reserve Bank’s 2–3% target band, as higher oil prices linked in the Middle East conflict fed through the broader economy.

Still, markets scaled back tightening expectations, with swaps pricing a 96% chance of the central bank holding the cash rate at 4.35% in June, up from 84% before the data.

Pricing for an August rate hike was also reduced to 24% from 45% previously.



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Aussie Dollar Dips on Softer CPI Data
The Australian dollar edged down to around $0.71, easing from a recent one-week high as softer-than-expected inflation data reduced expectations of further rate hikes. Data from the Australian Bureau of Statistics showed April's monthly CPI eased to 0.4% from a seven-month high of 1.1%, while the annual rate slowed to 4.2% from 4.6%, below forecasts of 4.4%, partly due to a government fuel tax cut. However, underlying inflation remained sticky, with the trimmed-mean measure of core inflation rising 0.3% on the month, in line with estimates, and 3.4% year-on-year, marking the highest since late 2024 and further above the Reserve Bank’s 2–3% target band, as higher oil prices linked in the Middle East conflict fed through the broader economy. Still, markets scaled back tightening expectations, with swaps pricing a 96% chance of the central bank holding the cash rate at 4.35% in June, up from 84% before the data. Pricing for an August rate hike was also reduced to 24% from 45% previously.
2026-05-27
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