The bid tone around the AUD strengthened, helping the AUD/USD pair recover losses after Australia's third-quarter inflation ticked higher as expected.
Australia's annualized consumer price index inched up slightly to 1.7% from 1.6% in three months to September. On a quarterly basis, the inflation decelerated slightly to 0.5% from the previous quarter's 0.6%.
The headline CPI was tipped to increase by 0.5% for the quarter and 1.7% over the year.
The trimmed mean CPI measure – the RBA’s preferred gauge of tracking underlying price pressures – increased 1.6% year-on-year and 0.4% quarter-on-quarter, as expected.
The uptick in the annualized inflation figure will likely force markets to price out the prospect of a further rate cut by the Reserve Bank of Australia (RBA) in November. Ahead of the inflation report, the implied probability of a 25 basis point cut to the cash rate in November stood at just 14%. Meanwhile, for the first time, the market is no longer priced for a 25 basis point cut in the first half of 2020.
The AUD, therefore, could continue to gain altitude during the day ahead. As of writing, the AUD/USD pair is trading at 0.6865, having recovered by 16 pips from the low of 0.6849 following the release of the Aussie CPI data.
Source : FX Street