The Australian dollar edged down to around $0.71, easing from a recent one-week high as softer-than-expected inflation data reduced expectations of further rate hikes. Data from the Australian Bureau of Statistics showed April's monthly CPI eased to 0.4% from a seven-month high of 1.1%, while the annual rate slowed to 4.2% from 4.6%, below forecasts of 4.4%, partly due to a government fuel tax cut. However, underlying inflation remained sticky, with the trimmed-mean measure of core inflation rising 0.3% on the month, in line with estimates, and 3.4% year-on-year, marking the highest since late 2024 and further above the Reserve Bank’s 2–3% target band, as higher oil prices linked in the Middle East conflict fed through the broader economy. Still, markets scaled back tightening expectations, with swaps pricing a 96% chance of the central bank holding the cash rate at 4.35% in June, up from 84% before the data. Pricing for an August rate hike was also reduced to 24% from 45% previously.