The Australian dollar fell in the Asian market on Wednesday against a basket of global currencies, moving in negative territory for the second consecutive day against its U.S. counterpart. This follows the release of Australian inflation data that came in below market expectations.

The data led to a decrease in the probability of the Reserve Bank of Australia (RBA) raising interest rates at its upcoming May meeting, despite warnings from the Treasurer that the oil shock could impact a broader range of prices across the country.

Price Overview

* **Australian Dollar Exchange Rate Today:** The Australian dollar fell 0.25% against the U.S. dollar to (0.7160), from an opening price of (0.7179), after recording a high of (0.7190).

* The Australian dollar ended Tuesday's trading down approximately 0.1% against the U.S. dollar, marking its first loss in three days amid a decline in U.S. stocks on Wall Street.

Inflation in Australia

Data released Wednesday by the Australian Bureau of Statistics showed that the headline Consumer Price Index (CPI) rose 4.6% annually in March, lower than market expectations of 4.8%. The index had recorded a 3.7% increase in February.

While automotive fuel prices jumped by nearly 33% in March compared to February, the government's measure to halve the fuel tax starting in April is expected to ease some pressures.

Treasurer Jim Chalmers stated in a press conference: "What we are seeing here is essentially a reflection of international pressures on oil prices. However, in the coming months, we expect the impact of this oil shock to extend across a wider range of prices, affecting trimmed mean averages as well."

Australian Interest Rates

* Following the aforementioned data, the market pricing for a 25-basis-point interest rate hike by the RBA in May fell from 85% to 75%.

* To refine these probabilities, investors are awaiting further data on unemployment and wage levels in Australia.

* The RBA has raised interest rates twice this year to 4.1%, resulting from the impact of the U.S.-Israeli war on Iran on global oil trade and rising fuel prices nationwide.

Opinions and Analysis

Stephen Smith, partner at Deloitte Access Economics, said: "Today's CPI data, the first to partially reflect the closure of the Strait of Hormuz, points to the possibility of the RBA raising interest rates next week." Smith added: "This hike is not certain, but Australia's inflation level prior to this crisis leaves the central bank with few options."

Tony Sycamore, an analyst at IG, noted that there is a counter-argument for the RBA to keep interest rates steady in May to gather more information, especially as gasoline prices have begun to decline in recent weeks.