The Australian dollar rose broadly in European trading on Wednesday against a basket of major currencies, extending gains for the sixth consecutive session versus the US dollar and hitting a three-week high. The currency has become one of the most attractive investment opportunities in the forex market following hotter-than-expected inflation data from Australia.

The strong inflation figures renewed pressure on policymakers at the Reserve Bank of Australia (RBA) and sharply reduced expectations for a rate cut at the November meeting.

Price Outlook

AUD/USD climbed 0.4% to 0.6608 its highest since October 9 up from the opening level of 0.6583, after touching an intraday low of 0.6579.

The pair ended Tuesday up 0.45%, marking its fifth straight daily gain, supported by positive trade developments between the US and China.

Inflation in Australia

Data from the Australian Bureau of Statistics on Wednesday showed that consumer prices rose 1.3% in the third quarter the fastest pace since Q1 2023 and above market expectations of 1.1%, following a 0.7% increase in Q2.

On a monthly basis, headline CPI rose 3.5% year-on-year in September, the highest since July 2024, exceeding expectations of 3.1% and up from 3.0% in August.

Australian Inflation Hits 14-Month High

The figures confirm that inflation is accelerating again and remains above the RBAs 23% medium-term target range, lowering the likelihood of further rate cuts this year.

Interest Rate Outlook

Following the data, market pricing for a 25-basis-point RBA rate cut in November dropped from 70% to just 25%.

The RBA held rates at 3.60% in September after three reductions earlier this year, awaiting more economic data before taking further action.

Analyst Views

Adam Boynton, Head of Australian Economics at ANZ Bank, said: If the economy proves materially weaker than expected, the RBA retains the option to ease policy in December, but the bar for any cut this year is now very high.

He added: We expect the most likely path to be a final 25-basis-point cut in the first half of 2026, though theres a risk that our February call could be delayed or may not happen at all.