**AUD/USD Extends Decline Amid Robust US CPI Data as Trump Renews Calls for Rate Cuts**
*Originally covered by FXStreet, additional information incorporated from Reuters and investing.com*
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The Australian dollar (AUD) continued to weaken against the US dollar (USD) in the wake of stronger-than-anticipated consumer price index (CPI) data from the United States, intensifying pressure on the AUD/USD pair. Meanwhile, renewed rhetoric from former US President Donald Trump advocating for interest rate cuts added further complexity to the current forex landscape.
This article explores the latest movements in the AUD/USD currency pair, analyzing key economic data, market reactions, and policy outlooks from both the United States and Australia. Insights from chief economists and major financial news sources contextualize the implications for traders, investors, and policymakers.
## Key Takeaways and Market Drivers
– The US dollar strengthened broadly after the release of CPI data indicating stubborn inflation.
– AUD/USD extended its recent decline, breaching significant support levels.
– Former President Donald Trump publicly pressured the Federal Reserve to cut rates.
– Divergent central bank outlooks between the Federal Reserve and the Reserve Bank of Australia (RBA) continue to impact the currency pair.
– Market participants adjusted their forecasts regarding the timing and scope of rate cuts in the United States and Australia.
## US CPI Data: Inflation Remains Stubborn
The US Bureau of Labor Statistics published the latest Consumer Price Index report, showing that inflation remained relatively elevated in June. This data delivered a jolt to financial markets, particularly affecting currency exchange rates.
– Headline annual CPI rose 3.3 percent year-over-year, marginally higher than market expectations.
– Core inflation, which excludes volatile food and energy prices, increased by 3.4 percent, also surpassing consensus estimates.
– Monthly core CPI showed a 0.3 percent rise, highlighting persistent inflationary pressures across various sectors.
– The data prompted a swift reevaluation of expectations for the Federal Reserve’s next moves.
According to market analysts, the robust inflation readings suggest that achieving the Federal Reserve’s target of 2 percent inflation will likely take longer, reducing the probability of near-term rate cuts.
## Federal Reserve Policy Outlook
Prior to the CPI release, markets had priced in multiple interest rate cuts by the Federal Reserve before year-end. Expectations shifted immediately after the inflation report.
– The CME FedWatch Tool revealed a decline in the probability of a rate cut in September, dropping from almost 70 percent to below 50 percent within hours.
– Federal Reserve officials reiterated their cautious stance, highlighting the need for further data before making monetary policy adjustments.
– Despite slowing job growth and cooling manufacturing indicators, inflation remains a sticking point for policymakers.
– FOMC members have indicated they require “greater confidence” that inflation is moving sustainably toward target levels before easing monetary policy.
This delay in anticipated rate cuts buoyed the US dollar, as higher interest rates tend to attract capital flows seeking greater returns.
## Trump’s
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