The Australian dollar edged down to below $0.72, but stayed near four-year highs as a sharp rise in inflation kept expectations of a rate hike next week. Headline inflation jumped to 4.6% annually in March, slightly below forecasts of 4.7%, but stayed above the Reserve Bank’s 2–3% target and marked the highest since monthly CPI data began in 2025.
The annual trimmed-mean measure held at 3.3%, in line with expectations as higher fuel costs stemming from Middle East supply disruptions added to already elevated price pressures. In the absence of a major upside inflation surprise, the Aussie attracted some sellers amid cautious risk sentiment due to persistent geopolitical uncertainties. Still, markets priced in increased odds of a 25 bp rate hike next week. In the US and other G-7 economies, policymakers are likely to hold rates steady this week while monitoring the risk of rising energy costs fueling inflation, as the Strait of Hormuz remained effectively closed amid US-Iran tensions.
