Aussie declines to three-week trough after inflation data

Australian dollar fell in European trade against a basket of major rivals, sharpening losses for the third day against US dollar and plumbing three-week lows following Australian inflation data. 

The data didn't present any bad surprises to RBA policymakers, in turn reducing the odds for another Australian rate hike next week.

Aussie is also hurt by weaker risk appetite as US treasury yields spike and the outlook for the global economy grows more despondent. 

AUD/USD

AUD/USD fell 0.4% today to 0.6371, the lowest since September 8, with a session-high at 0.6409, after losing 0.4% on Tuesday, the second loss in a row as the US dollar powers up against most rivals.

Australian Inflation

Australian consumer prices rose 5.2% y/y in August as expected, up slightly from 4.9% in July as global energy prices rose.

Analysts assert that the recent uptick in inflation is merely due to higher oil prices which recently approached $100 a barrel.

However, core inflation, excluding food and energy prices, continued to decline in Australia. 

Australian Rates

The Commonwealth bank expects the Reserve Bank of Australia to maintain rates unchanged at 4.1% as core inflation continues to taper up.