The Australian dollar has accelerated its decline as the monthly Consumer Price Index (CPI) for May came in below expectations, showing a slowdown in growth to 5.6%. This puts the CPI in the 5% range for the first time since April last year. In response, the Australian dollar has weakened by 0.78% against the US dollar, and the AUD/JPY pair has dropped to the 95.30 yen level. Additionally, the offshore yuan has also declined following the closely aligned reference rate, contributing to the selling pressure on the Australian dollar.
During the Tokyo session, we can observe a significant deceleration in Australia’s CPI, leading to accelerated selling of the Australian dollar. I had considered entering a position on the AUD based on today’s CPI data, but the current price movement is too volatile, and it is deemed risky to enter a short position at this point.
Both Canada and Australia have shown the effects of interest rate hikes, and CPI figures in these countries have generally been declining. It is important to continue monitoring CPI data as it can trigger significant market movements.