Australian Dollar Rises After Strong Australia CPI Data

The Australian dollar strengthened against other major currencies in the Asian session on Wednesday, after data showed that Australia's monthly consumer price index rose more than expected in July.

Data from the Australian Bureau of Statistics or ABS showed that the Australia's monthly Consumer Price Index or CPI rose 3.5 percent in the year to July, compared to a 3.8 percent increase seen in June. Economists expected the consumer price index to increase 3.4 percent in July.

The inflation data spurred speculation among the traders for further interest-rate hikes from the Reserve Bank of Australia (RBA), also fueled the strength of Australian dollar.

Traders remain cautious and await the release of key U.S. inflation report later in the week, which could impact expectations for how quickly the U.S. Fed will cuts interest rates.

In other economic news, data from the Australian Bureau of Statistics showed that the value of total construction work done in Australia was up a seasonally adjusted0.1 percent on quarter in the second quarter of 2024, standing at A$64.932 billion. That missed expectations for a gain of 0.8 percent following the 2.9 percent contraction in the three months prior.

On a yearly basis, overall construction work rose 1.5 percent.

In the Asian trading today, the Australian dollar rose to more than a 1-month high of 1.6408 against the euro, from yesterday's closing value of 1.6464. The aussie may test resistance around the 1.59 region.

Against the U.S. and the Canadian dollars, the aussie advanced to nearly an 8-month high of 0.6813 and a 2-day high of 0.9159 from Tuesday's closing quotes of 0.6792 and 0.9128, respectively. If the aussie extends its uptrend, it is likely to find resistance around 0.69 against the greenback and 0.93 against the loonie.

Against the yen and the NZ dollar, the aussie edged up to 98.25 and 1.0911 from yesterday's closing quotes of 97.77 and 1.0860, respectively. The next possible upside target of the aussie is found around 104.00 against the yen and 1.11 against the kiwi.

Looking ahead, the European Central Bank is slated to release monetary aggregates for July at 4:00 am ET in the European session.

In the New York session, U.S. MBA weekly mortgage approvals data and U.S. EIA weekly crude oil data are slated for release.