AUD/USD firms as Australian July CPI beats at 3.5% y/y, RBA cuts doubted

The Australian dollar caught a bid after July monthly CPI came in hotter than forecast at 3.5% year-on-year, above the 3.2% consensus though down from June's 3.8%. The monthly pace jumped 1.0% versus 0.8% expected and -0.1% prior, while the RBA's preferred trimmed mean core measure printed 3.6% y/y against 3.5% expected and unchanged from the previous month. On a monthly basis, trimmed mean accelerated to 0.5% from 0.3%, a clear upside surprise that keeps core inflation above the top of the RBA's 2-3% target band. The data materially reduces the scope for near-term RBA easing and should keep the front end of the Australian curve supported, a positive input for AUD/USD and a headwind for AUD/JPY shorts. Traders will watch whether AUD/USD can convert the initial data-driven pop into a sustained break of recent range resistance; failure to hold gains would suggest the market still views the monthly series as noisy. Broader direction remains contingent on Wednesday's US PCE inflation report and global risk sentiment.