AUD/USD turns down sharply from 0.7450 on Aussie CPI that misses the mark

• Aussie jumps then U-turns sharply on missed CPI readings, erasing Wednesday's gains, which were slim to begin with.
• Inflation continues to inch towards the RBA's desired levels, but progress has been marathon-levels of slow.

The AUD/USD is middling on a tense CPI release with spot rates prematurely jumping despite a disappointing showing for Australian inflation, and the pair is now shifting back down into 0.7415.

The Aussie peaked at 0.7440 just ahead of the Consumer Price Index figures, climbing steadily through Wednesday's early trading after rebounding from a bottom of 0.7358 on Tuesday, and the AUD/USD jumped on the CPI release, ticking towards 0.7450 before settling back within Wednesday's earlier highs as traders digested the bad CPI numbers.

Australia's inflation figures delivered less than markets were hoping for, with the headline q/q CPI for 2018's second quarter coming in at 0.4%, below the expected 0.5% and remaining steady with the previous reading, while the Reserve Bank of Australia's (RBA) Trimmed Mean CPI came in at expectations, remaining in-line with the previous figure of 0.5%. 

Inflation measures are slowly grinding their way higher over time, and annualized inflation is now sitting just beneath the RBA's 2-3% target range, though movement towards the central bank's goal has been sluggish. Rising fuel costs were one of the largest price movers, while vehicle purchasing, travel accommodation, and vegetable prices all helped keep inflation on the softer side.

AUD/USD levels to watch

With the Aussie now testing into Wednesday's early lows, buyers will be looking for support from the 0.7400 major level to keep the pair bolstered, with Tuesday's lows sitting near 0.7360, while traders on the short side will be looking to use the rejection from 0.7450 as impetus for a move lower.