Australian Dollar declines as annual CPI inflation falls in April

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AUD/USD extends its gains for the second successive day, trading around 0.7160 during the Asian hours on Wednesday. The pair declines as the Australian Dollar (AUD) loses ground following the release of domestic inflation data.

AUD/USD depreciates as the Australian Dollar loses ground following softer-than-expected inflation data.
Australia’s CPI rose 4.2% YoY, missing the 4.4% consensus and slowing from March’s 4.6% pace.
US Dollar struggles on fading safe-haven demand as traders hope for a US-Iran agreement despite regional tensions.

Australian Bureau of Statistics (ABS) showed on Wednesday that Consumer Price Index (CPI) rose 4.2% year-over-year (YoY), down from the market consensus of 4.4%. It came down from 4.6% in the 12 months to March 2026. The monthly Consumer Price Index came in at 0.4% in April, compared to the previous reading of 1.1%. The RBA Trimmed Mean CPI for April rose 0.3% and 3.4% on a monthly and annual basis, respectively.

The downside of the AUD/USD pair could be restrained as the US Dollar (USD) inches lower on fading safe-haven demand, as traders remain hopeful that the United States (US) and Iran could still secure an agreement despite renewed tensions in the Middle East.

Iran's foreign ministry has condemned recent US airstrikes in the southern Hormozgan province, labeling them a "gross violation" of a tenuous, seven-week-old ceasefire. The statement followed reports from Iranian media of explosions echoing through the region early Tuesday morning. Iranian Supreme Leader Mojtaba Khamenei said that Gulf powers will no longer be a shield for US bases, and the US will no longer have a safe haven in the region

The US military confirmed it launched self-defense strikes in southern Iran, while Iran’s Revolutionary Guard claimed it targeted an American F-35 fighter jet and several drones that had allegedly violated Iranian airspace. IRGC also stated that it reserved the “legitimate and definite” right to retaliate against any ceasefire violations by the US.

Economic Indicator

Consumer Price Index (YoY)

The Consumer Price Index (CPI), released by the Australian Bureau of Statistics on a monthly basis, measures the changes in the price of a comprehensive basket of goods and services acquired by household consumers. The indicator is the primary measure of headline inflation after a new methodology was applied to transition from quarterly to monthly readings, applying to data from April 2024 onwards. The YoY reading compares prices in the reference month to the same month a year earlier. A high reading is seen as bullish for the Australian Dollar (AUD), while a low reading is seen as bearish.