The "Aussie Cooling": CPI Surprise Offers Relief, but is the RBA Ready to Pivot?
In a significant update for the Australian economy, the latest Consumer Price Index (CPI) data has revealed a sharper-than-expected slowdown in inflation. Released this Wednesday, January 7, 2026, the figures show that headline inflation fell to 3.4% in the 12 months to November 2025. This marks a notable drop from the 3.8% recorded in October and has ignited fresh debate across the Forex markets regarding the Reserve Bank of Australia's (RBA) next move.
At GME Academy, we track these fundamental shifts closely, as they often dictate the long-term trend of the "Aussie" dollar against major global peers.
By the Numbers: Inflation Takes a Breather
The Australian Bureau of Statistics (ABS) reported that the monthly CPI was flat (0.0%) in original terms for November. While the headline number is the lowest since mid-2024, the "Trimmed Mean"— the RBA’s preferred measure that filters out volatile price swings—slipped more modestly to 3.2%.
While the direction is positive, the "sticky" nature of core inflation remains a thorn in the side of policymakers. The RBA’s target band is 2–3%, and current levels suggest that while the "fever" is breaking, the patient isn't out of the woods yet.
Key Inflation Drivers (Annual Change):
Housing (+5.2%): Driven by relentless rent increases and high electricity costs (up 19.7% as state rebates in Queensland were exhausted).
Food & Beverages (+3.3%): Coffee and cocoa prices saw a massive spike of over 15% due to global supply shortages.
Transport (+2.7%): Fuel prices remain a volatile contributor, jumping 2.5% in the month of November alone.
Forex Impact: Trading the AUD/USD and AUD/JPY
For those active in Forex Trading, the CPI release triggered an immediate reaction. Initially, the Australian Dollar (AUD) dipped on the "softer" headline print, as traders speculated that the RBA might have less reason to hike rates in February. However, the currency quickly recovered.
AUD/USD: The pair continues to hover near 14-month highs around 0.6730. The resilience of the AUD is largely due to the "Policy Divergence" between Australia and the US. While the Federal Reserve is facing a cooling labor market, the RBA remains in a "hawkish hold" with a cash rate of 3.60%.
AUD/JPY: This pair remains a favorite for "carry trades." With Japan’s Finance Minister Katayama threatening a "free hand" to intervene, the AUD/JPY is in a high-volatility zone. Stronger-than-expected commodity prices (Iron Ore and Gold) continue to provide a structural floor for the AUD.
For those exploring Forex Trading for Beginners, this scenario is a perfect lesson in why "headline" news doesn't always lead to a simple sell-off. Professional traders look at the Interest Rate Differential; as long as the RBA stays "higher for longer" compared to other central banks, the US Dollar may struggle to regain its dominance over the AUD.
The RBA’s Dilemma: Low Hiring vs. Sticky Services
The cooling CPI data arrives just as leading indicators point to a softening Australian labor market. Similar to the US "low hiring, low firing" trend, Australian unemployment has crept up to 4.5%.
The RBA's Monetary Policy Board meets in February. They face a delicate choice:
Cut Rates? Unlikely, given that services inflation (like medical and insurance) remains elevated.
Hike Rates? A 35% market probability exists if the Q4 quarterly data (due late January) shows another "pop" in core prices.
The "Hawkish Hold": Most analysts expect the RBA to stay at 3.60%, waiting for more evidence that inflation is truly returning to the 2% midpoint.
Navigating the "Aussie" Trend with GME Academy
Understanding the Consumer Price Index is fundamental to mastering the Forex market. At Global Markets Eruditio, we believe that data is only half the story—the other half is knowing how the market interprets that data.
Is the 3.4% print a sign of a "Soft Landing," or is the Australian economy heading for a sharper slowdown? Whether you are trading AUD/USD, EUR/USD, or searching for the best Forex Trading for Beginners resources, staying ahead of the curve is your greatest asset.
The "Aussie" is moving—are you positioned to profit? Don't leave your trading success to chance.
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