Australian Dollar advances despite lower-than-expected monthly Consumer Price Index

The Australian Dollar gains ground as the US Dollar remains subdued amid bond market optimism.

Australia’s Monthly Consumer Price Index remained consistent at a 2.1% rise YoY in October, against an expected 2.3% increase.

November’s FOMC Meeting Minutes indicated that policymakers are adopting a cautious stance on rate cuts.

The Australian Dollar (AUD) halts its three-day losing streak on Wednesday as the US Dollar (USD) remains subdued amid bond market optimism. Additionally, the Reserve Bank of Australia's (RBA) hawkish outlook on future interest rate decisions provides support for the AUD.

Australia's monthly Consumer Price Index (CPI) rose by 2.1% year-over-year in October, unchanged from the previous month but below market expectations of 2.3%. This marked the lowest inflation rate since July 2021 and remained within the central bank's target range of 2-3% for the third consecutive month.

The upside of the AUD/USD pair could be restrained due to dampened market sentiment following President-elect Donald Trump's announcement of a 10% increase in tariffs on all Chinese goods entering the United States (US). Given that both countries are close trade partners, any change in China's economy would impact Australian markets.

China’s Ambassador to Australia remarked on Tuesday that "US policy on trade with China and other countries will have an impact." The Ambassador highlighted China's expectation for dialogue with the US to address trade policies and explore ways to manage their bilateral relationship effectively.