Aussie Hits 5-Week High on Hot CPI Print
The Australian dollar strengthened to above $0.70, hitting a five-week high after hotter-than-expected inflation data boosted expectations for a fifth interest rate hike this year. Annual inflation jumped to 4.3% in September from 4.0% in August, surpassing the 4.2% forecast and reaching its highest level since March. The pickup pushed inflation further above the RBA’s 2—3% target range, boosting bets on a hike at the November 3 meeting. Monthly CPI rose 0.8%, the biggest increase in six months, also exceeding expectations of 0.7%. The data followed remarks from RBA Governor Michele Bullock earlier on Wednesday, when she warned that upside risks to inflation were materializing and price pressures would likely exceed the central bank’s August forecast. She also cautioned that prolonged deviations from the target could entrench inflation expectations and influence price and wage setting. Traders raised the probability of a November hike to 78%, up from 70% before the inflation report.
The Australian dollar strengthened to above $0.70, hitting a five-week high after hotter-than-expected inflation data boosted expectations for a fifth interest rate hike this year. Annual inflation jumped to 4.3% in September from 4.0% in August, surpassing the 4.2% forecast and reaching its highest level since March. The pickup pushed inflation further above the RBA’s 2—3% target range, boosting bets on a hike at the November 3 meeting. Monthly CPI rose 0.8%, the biggest increase in six months, also exceeding expectations of 0.7%.
The data followed remarks from RBA Governor Michele Bullock earlier on Wednesday, when she warned that upside risks to inflation were materializing and price pressures would likely exceed the central bank’s August forecast. She also cautioned that prolonged deviations from the target could entrench inflation expectations and influence price and wage setting. Traders raised the probability of a November hike to 78%, up from 70% before the inflation report.