Aussie Dollar Dips on Softer CPI Data

2026-07-29 02:13 By Joshua Ferrer 1 min. read

The Australian dollar fell below $0.695, reaching its weakest level in two weeks as softer inflation data dampened expectations of additional interest rate hikes.

Headline inflation unexpectedly eased to a four-month low of 3.8% in June from both May's reading and forecasts of 4.0%, while monthly consumer prices unexpectedly fell 0.1% for a second straight month.

Meanwhile, the closely watched trimmed mean inflation rate rose 3.6% annually, below expectations of 3.7%, while quarterly core inflation increased 0.8%, also undershooting forecasts.

Although inflation remains above the Reserve Bank’s 2%–3% target range, markets sharply scaled back bets on another rate hike this year to around 50% from more than 90% before the release.

The softer readings also reinforced the view that the central bank is unlikely to resume policy tightening at its August 11 meeting.

Still, the RBA's governor recently warned that another rate hike may still be needed to bring inflation back to target.



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