The Australian dollar moved higher against its major counterparts during the Asian session on Wednesday, as the nation’s inflation accelerated more than forecast in the fourth quarter, intensifying expectations that the Reserve Bank of Australia will raise the cash rate by 25 basis points in February.
Data from the Australian Bureau of Statistics showed that consumer prices in Australia were up 7.8 percent on year in the fourth quarter of 2022 – exceeding estimates for 7.5 percent and accelerating from 7.3 percent in the three months prior.
On a seasonally adjusted quarterly basis, inflation climbed 1.9 percent – again beating forecasts for 1.6 percent and up from 1.8 percent in Q3.
Hotter-than-expected inflation data increased the likelihood of a 25 basis-point hike by the RBA at the monetary policy meeting on February 7.
The Australian stock market fell after the data, with the benchmark S&P/ASX 200 Index falling 22.10 points or 0.30 percent to 7,468.30.
The AUD/USD pair climbed to more than a 5-month high of 0.7123. The aussie is likely to locate resistance around the 0.75 level.
The AUD/JPY pair strengthened to near a 6-week high of 92.79. The aussie may target resistance around the 95.00 level.
The AUD/CAD pair moved up to a 9-1/2-month high of 0.9505. On the upside, 0.98 is possibly seen as its next resistance level.
The AUD/NZD pair rallied to more than a 2-month high of 1.0965. If the aussie rallies again, 1.12 is seen as its next resistance level.
The EUR/AUD pair fell to 1.5317, its lowest level since December 1. The aussie is seen facing resistance around the 1.45 level.
Looking ahead, at 10 am ET, the Bank of Canada will announce its interest rate decision. The BoC is widely expected to raise interest rate to 4.5 percent from 4.25 percent.