As the dollar recovers and Asian currencies dip, the Australian dollar stands out with near eight-month high due to strong inflation data, hinting at a hawkish Reserve Bank. Meanwhile, concerns over China's trade tariffs weigh on sentiment in the region.
Australian Dollar at Near 8-Month High on Sticky CPI
The Australian dollar is up 0.1% at a near eight-month high after consumer price index data exceeded expectations for July. Despite subsidies on electricity costs reducing overall inflation, high food prices pushed the CPI up by 3.5%, remaining above the Reserve Bank of Australia's target range of 2% to 3%. This has sparked speculation of a hawkish RBA stance.
Dollar Recovers from 13-Month Low, PCE Data Awaited
The US dollar and euro both rose 0.2% in Asian trade, bouncing back from a 13-month low hit earlier in the week. The greenback had been under pressure from dovish signals from the Federal Reserve, leading to increased bets on a September rate cut. Traders are divided on the size of the cut, with some even speculating on a 100 basis point reduction by year-end. Focus is now on PCE data for more insights into the Fed's rate-cutting plans.
Overall, the Asian market remains cautious due to ongoing concerns over global trade tensions, with currencies like the Japanese yen and Chinese yuan reacting to market uncertainties. With central banks around the world adjusting their policies, investors need to stay informed and adapt their strategies accordingly to navigate these volatile times.