The Australian dollar, paired with the US dollar, declined on Wednesday. The current AUDUSD exchange rate stands at 0.6567.
Inflation data in Australia reinforced market expectations of an imminent interest rate reduction. The consumer price index in Q4 dropped to 4.1% year-over-year from the previous 5.4%. Quarterly, the indicator rose by a mere 0.6% against the expected 0.8% and the prior increase of 1.2%.
Both the weighted median CPI for the quarter and the trimmed-mean CPI have decreased, which is positive news for the Reserve Bank of Australia but not the Aussie.
The market is changing its view on the outlook for the central bank rates, with the rate now expected to be reduced by June. Investors assess this probability at 70%, compared to 50% a week ago.
The RBA's interest rate currently stands at 4.35% per annum.