​AUD/USD Dips But Holding Above 50-day EMA For Now, RBA Hike Odds Slashed Post CPI Print  ​​​​​​

In the lead up to the CPI print, AUD/USD was already under some modest pressure, amid broad USD gains. From around 0.6775 we slumped back to 0.6731, on the headline and core CPI q/q misses. We have stabilized somewhat now. The pair was last in the 0.6740/50 region, still 0.65% weaker versus NY closing levels. The currency is the worst performer in the G10 space so far today.

• Support for the A$ has been evident this week in the 0.6715/25 region, which also coincides with the 50-day EMA (0.6719). Beyond that lies the July 11 low at 0.6651.
• Both the trimmed mean and weighted median were revised higher for q1 by 0.1ppts, while the ABS noted services inflation rose to 6.3% y/y in Q2 from 6.1%, which is the strongest pace since 2001.
• Still, RBA dated OIS pricing has gaped 6-14bp softer across meetings. The market now attaches a 29% chance of a hike by the RBA in August versus 58% pre-data.
• The AU-US 2yr government bond yield spread has fallen nearly 9bps to -93.5bps. This is back close to July lows.
• Another headwind for AUD/USD is the weaker regional equity tone so far today.