2026.05.2601:58:59UTC+00Aussie Edges Lower as CPI Looms

The Australian dollar eased to around $0.71 but remained close to a one-week high, as renewed US strikes on Iran undermined hopes for a peace agreement and tempered risk sentiment. Investors also stayed cautious ahead of key domestic inflation data.

April CPI, due Wednesday, is expected to show consumer prices rising 0.6% month-on-month, with annual inflation edging down to 4.4% from 4.6%, largely reflecting a government fuel tax reduction. However, the Reserve Bank of Australia’s preferred core gauge, the trimmed mean, is forecast to quicken to 3.4% year-on-year from 3.3%, driven by higher transport and logistics costs across a wide range of sectors.

A stronger-than-expected inflation print could bolster the case for additional monetary tightening, though markets currently price only a 10%–12% probability of a 25-basis-point rate increase in June, while the likelihood of an August hike is seen at around 50%.

In commodities, oil prices moved higher after reports of new military strikes in Iran dimmed the chances of an interim agreement between Tehran and Washington to reopen the Strait of Hormuz.