AUD/USD has come under pressure following the soft inflation data from Australia. Economists at Commerzbank analyze Aussie’s outlook.

Inflation leaps downwards

The quarterly increase was halved from the previous quarter, and at 0.6% quarter-on-quarter, is now in line with the RBA's inflation target of 2-3%. So it's no wonder that the market is starting to price in bigger rate cuts and the Aussie is coming under pressure.

The RBA may adopt a more dovish tone in its next statement, which, combined with lower inflation forecasts, could put further pressure on the Aussie. 

However, the next inflation figures, especially those for the first quarter of 2024, will be crucial for further action. Until then, AUD/USD will likely be more dependent on the US side than usual. If, as our economists expect, there is a mild recession in the US and the Fed begins its cycle of rate cuts in the coming months, we should see much higher levels again.