Aussie descends following mixed CPI data

On Wednesday, the Australian dollar sagged during Asia trade after consumer price data kicked in a tad weaker than expected.   

The currency pair AUD/USD was worth 0.7497, showing a 0.08% slump, while USD/JPY traded at 105.18, with a 0.52% rise.

In Australia, CPI data for the second quarter demonstrated a 0.4% soar quarter-on-quarter as expected. Meanwhile, the year-on-year figure was 1%, just a bit below the 1.1% pace observed.

As for year-on-year inflation - the most crucial number for the market as well as the Reserve Bank, it was somewhat higher than expected, hitting 1.5%.

Accordingly, the overall outcome is quite mixed, though still keeps alive the probability of a rate drop at the RBA's August board gathering. A lot will depend on how the RBA considers inflation pressures going ahead and that extent still-soft housing related inflation. Obviously, soft non-tradable inflation might push Australia’s major financial institution over the line for a cut.

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