Softer Australia CPI but RBA still hawkish – Rabobank

Rabobank's latest report indicates that Australia's August Consumer Price Index (CPI) was slightly softer than expected. The headline inflation rate stood at 0.4% month-over-month (m/m) and 4.0% year-over-year (y/y), while the trimmed mean remained at 0.2% m/m and 3.6% y/y. Earlier in Q3, the Reserve Bank of Australia (RBA) increased interest rates once again, and remains on track to do so again in the coming year.

Despite the easing inflation numbers, weak building approvals have contrasted with the booming data center activity, which may impact the Australian Dollar's future prospects. Throughout Q3, major central banks including the RBA, the European Central Bank (ECB), the Bank of Japan (BoJ), and the U.S. Federal Reserve (Fed) have all raised rates or indicated further hikes are on the horizon.

As such, the focus remains on determining how much more tightening might be necessary across these institutions and other global monetary authorities. In the current market, AUD/USD is trading at two-month lows near 0.6950, while Chinese PMI data have failed to bolster the Australian Dollar's value, despite a temporary pause in the U.S. Dollar's advance.

USD/JPY remains under pressure, falling below 157.00 amid hawkish BoJ expectations and intervention risks. Gold has also reversed course, moving toward the $4,150 level per troy ounce. Meanwhile, Bitcoin and Ethereum are both experiencing volatility, with Bitcoin struggling to hold above the immediate $83,000 level and Ethereum trading below $2,700 and $2,600 support levels, respectively.

Additionally, EUR/USD has fallen to its lowest level since May 2025, but a fresh inflation shock in the Eurozone could provide the euro with a much-needed boost, as its value dipped to 1.1312 during Wednesday's trading session.