Australian Dollar moves lower on CPI data

• Australian Dollar slides lower on CPI release.
• RBA has stated last week that rate cuts are not on the table.
• Markets are confident of a single 25 bps cut by year's end.

The Australian Dollar retreated against its US counterpart following the release of Australia's latest inflation data. The soft inflation data has reinforced expectations that the Reserve Bank of Australia (RBA) will cut interest rates later this year. A slowdown in household spending further suggests that the economic cycle in Australia may be easing.

Amidst a complex economic landscape in Australia, the RBA is concerned over persistent inflation and have prompted a cautious approach. With the soft figures released on Wednesday, the markets now anticipate a modest 25 basis point rate reduction in 2024.

Daily digest market movers: Australian Dollar declines on CPI data

• Australia's July Consumer Price Index (CPI) came in at 3.5% YoY, slightly higher than expected but still within the RBA's target range.
• Trimmed mean inflation fell to 3.8% y/y, its lowest level since January.
• The RBA has indicated that it is unlikely to cut interest rates in the near term, but the market continues to expect a 25 bp cut by year-end.
• If the RBA signals a hawkish approach, the downside for the Aussie is limited.

AUD/USD Technical Outlook: Pair sees slight decline, key levels in play

The AUD/USD pair experienced a slight decline on Wednesday, as buyers continued to lock in profits from last week's rally. The Relative Strength Index (RSI) fell to 60, indicating a lean towards a neutral market sentiment. The Moving Average Convergence Divergence (MACD) shows flat green bars, suggesting a lack of momentum.

After last week's gains, the pair has been consolidating within a range of 0.6750-0.6820, and a break above these levels might set the pace of the pair in the next sessions.