Australian Dollar Retreats After Rising on Good Inflation Report

The Australian dollar rose on Wednesday after a positive inflation report released in Australia. But as of now, the currency has lost its gains due to risk aversion that prevailed on markets.
The Australian Bureau of Statistics reported that the Consumer Price Index rose by 1.6% in the September quarter (1.5% with seasonal adjustments). The increase followed the 1.9% drop in the previous three months. Year-on-year, the index increased by 0.7%. The trimmed mean CPI (which is an equivalent of a core CPI) rose by 0.4%, exceeding the median forecast of a 0.3% increase slightly. The report explained the increase for the most part by the end of free childcare:

Child care was the most significant rise (contributing 0.9 percentage points to the headline CPI quarterly movement), following the end of free child care on 13 July.

The Australian currency rallied initially thanks to the positive data but could not keep its gains. The increasing number of coronavirus cases and tightening lockdown restrictions across Europe put markets in a risk-off mode, limiting demand for riskier currencies like the Australian dollar. The Aussie was attempting to keep its gains versus the euro, which also suffered from risk aversion, but currently, the EUR/AUD pair has broken to the upside and is trading above the opening level.
AUD/USD dropped from 0.7123 to 0.7085 as of 10:30 GMT today after rising to 0.7157 earlier during the trading session. AUD/JPY fell from 74.42 to 73.86. EUR/AUD traded at 1.6576 after opening at 1.6541 and falling to the daily low of 1.6460.
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Original from: www.earnforex.com