Aussie Holds Firm on China Inflation, Fed Signals

Written by Sandra Leggero

Sandra Leggero has a background in financial markets, having spent more than 9 years in commodities trading for several European and Asian companies. She holds a degree in Economics from the University of Pavia and specializes in emerging markets.

, | Updated: October 14, 2026

Key Moments

AUD/USD trades around 0.6990 in Asian hours, extending gains into a second consecutive session.
China’s September CPI rises 0.9% YoY while PPI jumps to 5.0%, both closely watched by AUD traders.
Markets await US September CPI, with headline inflation expected at 3.6% YoY and core at 2.5% YoY.

Australasian FX: AUD/USD Extends Two-Day Advance

AUD/USD is firmer for a second straight session, trading near 0.6990 during Asian dealings on Wednesday. The Australian Dollar is maintaining its recent strength against the US Dollar after the release of fresh inflation data from China, a key destination for Australian exports.

Chinese Inflation Data: Mixed CPI, Stronger PPI

China’s National Bureau of Statistics reported that the country’s Consumer Price Index increased 0.9% year-over-year in September, edging up from 0.8% in August but falling slightly short of the 1.0% market consensus. On a month-over-month basis, Chinese CPI rose 0.2% in September, down from a 0.4% gain previously and below expectations for a 0.3% rise.

Producer prices strengthened more decisively. The Producer Price Index advanced 5.0% year-over-year in September, accelerating from a 3.8% increase in August and beating forecasts for a 4.5% gain. These figures are being closely watched by currency traders given China’s importance to Australia’s trade flows.

Chinese Inflation Indicators – September	Actual	Consensus	Previous
CPI YoY	0.9%	1%	0.8%
CPI MoM	0.2%	0.3%	0.4%
PPI YoY	5.0%	4.5%	3.8%

US Dollar Eases After Fed Commentary

The US Dollar has softened, lending additional support to AUD/USD, following comments from New York Federal Reserve President John Williams. Speaking on Tuesday, Williams reiterated that he still views one more rate increase as potentially appropriate this year, but he does not anticipate further rate hikes in 2027.

Despite these remarks, derivatives pricing suggests that market participants are not fully aligned with his outlook. According to the CME FedWatch tool, Fed funds futures traders are still largely positioned for at least one additional US rate increase in 2027.

Attention Turns to US September CPI Release

Market participants are now focused on the upcoming US Consumer Price Index data for September, due later in the North American session. The release is viewed as a key input for assessing the Federal Reserve’s next policy steps.

Consensus forecasts point to headline US CPI rising 3.6% year-over-year in September, up from 3.4% in August. Core CPI, which excludes more volatile components, is projected to climb 2.5% year-over-year, compared with 2.4% previously. The outcome could influence expectations for the future path of US interest rates and, by extension, the trajectory of the US Dollar and AUD/USD.

US CPI Expectations – September	Expected	Previous
Headline CPI YoY	3.6%	3.4%
Core CPI YoY	2.5%	2.4%

IMF Meetings: Potential Catalyst for Volatility

Strategists at Scotiabank highlight the upcoming IMF meetings as a potential source of renewed market turbulence, stating they

“will provide a significant amount of headline risk as market participants assess policymakers’ appetite for continued tightening in an environment of elevated oil prices and broadening inflationary pressures.”

China CPI (YoY): Definition and Latest Release Details

The Consumer Price Index (CPI) in China, compiled and released monthly by the National Bureau of Statistics of China, tracks changes in the prices of consumer goods and services purchased by residents. It is widely used to gauge inflation conditions and shifts in consumption patterns. The year-over-year figure compares prices in the reported month with the same month one year earlier. In general, higher CPI readings are typically interpreted as supportive for the Renminbi (CNY), while lower readings tend to be viewed as negative for the currency.