Aussie Rises As Robust Inflation Data Spurs RBA Rate Cut Pause

(RTTNews) - The Australian dollar strengthened against other major currencies in the Asian session on Wednesday, as traders' bet on rate cut pause by the Reserve Bank of Australia (RBA), following the release of robust Australia's Consumer Price Index (CPI) data.

When the RBA meets on November 4, the market swung abruptly to suggest that there is only an 8% chance that it will lower its 3.60% cash rate by a quarter point, down from 40% prior to the data.

Data from the Australian Bureau of Statistic or ABS showed that Australia's Consumer Price Index increased 1.3 percent in the third quarter (Q3) in contrast to the 0.7 percent growth in the second quarter. The market anticipated 1.1 percent growth over the period under review.

In the third quarter, the CPI inflation increased to 3.2 percent year-over-year, up from 2.1 percent previously and above the 3.0 percent market consensus.

The quarterly and yearly increases in the RBA Trimmed Mean CPI for Q3 were 1.0 percent and 3.0 percent, respectively. In the quarter ending in September, the markets forecasted a 2.7% YoY and a 0.8% QoQ growth.

In contrast to the prior figure of a 3.0 percent increase, the monthly Consumer Price Index increased by 3.5 percent YoY in August. This number was higher than the 3.1 percent forecast.

In the Asian trading today, the Australian dollar rose to nearly a 3-week high of 1.7630 against the euro and a 2-day high of 100.39 against the yen, from yesterday's closing quotes of 1.7721 and 99.92, respectively. If the aussie extends its uptrend, it is likely to find resistance around 1.75 against the euro and 101.00 against the yen.

Against the U.S., the Canada and the New Zealand dollars, the aussie advanced to near 3-week highs of 0.6607, 0.9207 and 1.1428 from Tuesday's closing quotes of 0.6585, 0.9178 and 1.1387, respectively. The aussie may test resistance around 0.67 against the greenback, 0.93 against the loonie and 1.15 against the kiwi.

Looking ahead, U.S. MBA mortgage approvals data, U.S. pending home sales data for September and U.S. EIA crude oil data are slated for release.

At 8:45 am ET, the Bank of Canada is set to announce its interest rate decision. The central bank is expected to keep its interest rate steady at 2.5 percent.