The Australian dollar rose in Asian trade on Wednesday against a basket of major rivals, hitting two-week highs against its US counterpart following hot inflation data.

Australian consumer prices rose to their highest level this year, raising inflationary pressures on the central bank and wiping out hopes of rate cuts this year.

The Price

The AUD/USD pair rose 0.5% today to 0.6679, the highest since June 12, with a session-low at 0.6636.

Aussie lost 0.15% against the US dollar on Tuesday, the third loss in four sessions on risk aversion.

G8 Currencies

Aussie became the best performing G8 currency today, rising 0.5% against the US dollar, and 0.4% against both the euro and sterling, and 0.55% against the Swiss franc.

It also rose 0.6% against the yen, hitting a 17-year peak at 106.77, while rising 0.6% against the kiwi to a five-week high at 1.0918.

Australian Inflation

Earlier government data showed Australian inflation surged 4.0% in May, the fastest pace since December 2023, and above expectations of 3.8%.

The persistently high services prices are a disappointment to policymakers, and will likely rule out any interest rate cuts this year.

Australian Rates

In fact, the Reserve Bank of Australia is now poised for a potential interest rate hike this year instead of a cut to control inflation.

RBA President Michelle Bullock directly hinted at a potential rate hike at the last policy meeting, if data required such a move.