Remember the recent Reserve Bank of Australia (RBA) statement?
The central bank said further interest rate setting will depend on incoming economic data.
As a result, the RBA may be forced to raise its interest rates further after the latest reading in Australian inflation data showed an increase above expectations!
In April, Australia's consumer price index (CPI) unexpectedly rose to 6.8% year-on-year from 6.3% recorded in March and was also higher than expected to rise 6.5%.
This has rekindled expectations for Australia's central bank to continue its tightening cycle.
Earlier this month, the RBA surprised the market by raising interest rates by 25 basis points after keeping them unchanged in April.
Despite being signaled by stronger readings in inflation data, the Aussie dollar unfortunately failed to capitalize on the opportunity to rally higher.
On the other hand, the risk-sensitive currency slipped lower following Chinese manufacturing data which showed continued weakness in May and was also affected by the strengthening of the US dollar.
