Australian Dollar Hits 9-Week Low

The Australian dollar fell below $0.70, hitting a nine-week low after August inflation figures undershot forecasts, trimming bets of near-term interest rate hikes. The monthly CPI rose 0.4%, below the expected 0.5%, while the annual pace accelerated to 4% from 3.5% in July but was below the 4.1% forecast. The trimmed-mean measure of core inflation rose 0.2% month-over-month, also under the 0.3% forecast, although annual core inflation held at 3.6% for a third straight month and remained above the Reserve Bank’s 2—3% target band, a key factor behind the central bank’s decision to lift rates to a 15-year high of 4.60% on Tuesday. The marginal inflation miss still led markets to cut the odds of another hike in November to 20% from 36% before the data, while the next increase is now seen more likely in March rather than February. The Aussie is now on track for a roughly 2.8% monthly loss, as a stronger US dollar and ongoing Middle East tensions weighed on the risk-sensitive currency.