Australian dollar hits 9-week low, rounds out a rough month

Business Recorder reported that the Australian dollar fell to its weakest level in nine weeks on Wednesday after August inflation readings landed slightly under expectations. That softer print reduced market bets on another interest rate rise in the near term, with the odds of a November hike sliding to 20% from 36% before the release. The currency was down 0.3% at $0.6963, extending its monthly decline to 2.8%.

Consumer prices rose 0.4% in August, below the forecast of 0.5%, as cheaper clothing and travel offset sharply higher fuel costs. On an annual basis, the index still accelerated to 4.0%, with price increases spread widely. The trimmed mean measure of core inflation climbed 0.2% month on month, short of the 0.3% projection, while its yearly rate held at 3.6% for a third consecutive month.

The Reserve Bank of Australia lifted its cash rate to a 15-year high of 4.60% on Tuesday, and Capital Economics economist Abhijit Surya said the bank is likely to stay in wait-and-see mode for the time being. Bond markets recovered from heavy losses, with 3-year debt futures up 8 ticks to 95.100 and 10-year yields down 5 basis points at 5.329%. The New Zealand dollar held at $0.5640 after touching its lowest level this year on Tuesday, and it shed 4.7% over the month.