The Australian dollar climbed to its highest level since early June after July inflation data came in hotter than forecast, reviving bets on another Reserve Bank of Australia rate hike. The broader U.S. dollar held steady as traders awaited the Fed's preferred inflation gauge ahead of the Jackson Hole symposium.
The Australian dollar led gains among major currencies on Wednesday, with AUD/USD rising 0.3% to $0.718, its highest since early June.
Hot July CPI revives RBA hike bets
Data released Wednesday showed the monthly consumer price index rose 1.0% in July, above forecasts for a 0.8% increase. The annual inflation rate slowed to 3.5% from 3.8%, but the trimmed mean measure rose 0.5% on the month, keeping annual core inflation at 3.6%.
Markets lifted the probability of a fourth RBA rate hike this year. Broader Asian currencies, meanwhile, lacked a clear direction as easing Middle East tensions improved risk sentiment.
Dollar holds near three-month low before PCE
Elsewhere, the US Dollar Index ticked up 0.1% to 98.98, still within striking distance of last week's three-month low. Investors were awaiting the U.S. personal consumption expenditures price index, the Federal Reserve's preferred inflation gauge, due later Wednesday ahead of the Jackson Hole symposium this weekend.
The data could shape expectations for the Fed's next policy move after markets weighed persistent inflation against concerns over U.S. government debt. The Treasury's expanded debt buyback programme has eased some pressure on longer-dated yields, though analysts said it did little to address the underlying rise in government debt and interest costs.
Source: Investing.com
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