Commodity dollars have been falling since July as China’s economy has shown considerable weakness and risk sentiment has deteriorated. AUD/USD has been decreasing, as this pair went below the 0.64 level, which had previously functioned as a support level. On the daily chart, the 20 Simple Moving Average (gray) has been acting as resistance, rejecting the price twice this month.

For the third month in a row, the RBA kept the official cash rate at 4.10% in the last meeting which means that they are done with raising rates, while the FED is still leaving the door open for one more hike, which has been keeping the USD bullish. RBA’s Lowe also tried to leave the door open for future rate hikes, indicating that while the RBA had “passed its peak,” it was “still too high and will remain so for some time yet.” So, markets are not expecting any more hikes

Today’s inflation report was expected to show a 3 point jump in August which would take the CPI to 5.2% and it came as expected. Some are saying now that the RBA is not done with rate hikes after today’s numbers.

Australian August Consumer Price Index Inflation Report

• August monthly CPI YoY 5.2% vs expected 5.2%
• July CPI YoY was 4.9%
• August CPI MoM rise was 0.6%
• July CPI MoM 0.3%

For core measures:

• August core CPI excluding Fruit and vegetables, Automotive fuel, and Holiday travel and accommodation 5.5%
• Prior core CPI YoY was 5.8% in July
• This drip lower in underlying inflation will be welcomed by the RBA
• Trimmed mean August CPI 5.6%
• Prior trimmed mean was also 5.6%

AUD/USD Live Chart