- AUD/USD picks up a bid on above-forecast Australian inflation data.
- Upbeat core inflation forcing markets to price out prospects of an RBA rate cut next week.
The bid tone around the Aussie Dollar strengthened, helping the AUD/USD pair erase losses and turn green after Australia reported a better-than-expected inflation figure for the second quarter.
Australian inflation, as represented by the consumer price index (CPI), rose 0.6% quarter-on-quarter in the second quarter, beating the expected rise of 0.5% following a 0.0% reading in the first three months of this year.
The annualized figure come in at 1.6%, beating the expected rise of 1.5% from the preceding quarter’s print of 1.3%.
The RBA’s Trimmed Mean CPI or core inflation increased by 1.6% year-on-year in the second quarter, beating the estimated rise of 1.5%. The quarter-on-quarter reading ticked higher to 0.4% as expected from 0.3%.
With upbeat core inflation, the Reserve Bank of Australia has room to stand pat next week. As a result, the Australian Dollar is gaining ground.
As of writing, the AUD/USD is trading at the session high of 0.6884, representing 0.16% gains on the day. The pair hit a low of 0.6862 earlier today, a level last seen on June 19.
It is worth noting that the central bank eased a quarter of a percentage point at each of its last two meetings, taking the cash rate to a historic low of 1 percent. More importantly, markets were worried that the RBA may cut rates again next week if the inflation figure disappoints expectations.
Pivot levels
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