Aussie dollar slumps on inflation

Financial and commodity markets analytics

The Australian dollar had its biggest fall of the year today on the back of weak data and gave the RBA some ammunition to cut rates in the nearest future.

The local currency dropped as much as 2 percent towards the US76c mark after the worst CPI numbers since 2008 hit the market and seemingly bringing the Aussie dollars stellar run to a thundering end.

Doing the damage was the latest CPI figures from Australia which came in -0.2 percent, well below expectations for a number of 0.3 percent and seemingly bringing an unexpected scenario into the Reserve Bank of Australia’s rate decision next week.

Before today’s inflation numbers the chance of the RBA cutting rates at their next meeting were nearly 0 percent and now the chance amongst analysts stands at over 40 percent.

Many had already questioned the recent rise of the Australian dollar largely due to the rise in Iron ore, Australia’s biggest export.

With that rally also not expected to last we may see further loses coming for the currency over the coming days and especially in the run up to the interest rate decision.


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