The Australian dollar fell in Asian trading on Wednesday against a basket of global currencies, extending its losses for the fourth consecutive day against its US counterpart and moving lower toward a seven-week low, following the release of key inflation data in Australia.

The data showed an unexpected slowdown in Australian inflation in February, easing inflationary pressures on policymakers at the central bank, which led to a slight decline in expectations for an interest rate hike in May.

Price Overview

Australian dollar exchange rate today: the Australian dollar fell 0.3% against its US counterpart to 0.6970, down from the session opening level of 0.6991, after reaching a high of 0.7004.

The Australian dollar ended Tuesdays session down 0.2% against the US dollar, marking its third consecutive daily loss, and recorded a seven-week low of 69.11 cents in the previous session.

Inflation in Australia

Data released on Wednesday by the Australian Bureau of Statistics showed that the headline consumer price index rose 3.7% year-on-year in February, below market expectations of a 3.8% increase, after rising 3.8% in January.

Australian inflation below expectations in February

These data indicate a slight slowdown in the pace of Australian inflation, somewhat easing inflationary pressures on policymakers at the Reserve Bank of Australia, as they await further data in the coming period to assess the impact of recently rising global oil prices on consumer prices in Australia.

Australian interest rates

Following the data above, markets reduced pricing for the probability of a 25-basis-point rate hike by the Reserve Bank of Australia in May from 65% to 55%.

To reassess these expectations, investors are awaiting further data on inflation, unemployment, and wages in Australia.

The Reserve Bank of Australia has raised interest rates twice this year to 4.1%, due to the impact of the US-Israel war with Iran on global oil trade and rising fuel prices across the country.