Australia just dropped a major plot twist with their July CPI report, flexing at 2.8% yearly while all the experts expected a chill 2.0%. 😳 This spicy inflation read threw a wrench in the gears for RBA rate cuts, made the Aussie dollar flex 😎, and threw some shade on USD during a week filled with drama about Fed independence and mixed vibes in the risk market.

Let's dig into which currency pairs from our watchlist seized the moment like TikTok trends, riding the wave of reduced RBA laid-back vibes and the USD’s soft spot to see if our AUD enthusiasm got us some mad gains or nah. 🚀

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The Setup

• What We Were Watching: Australia’s Consumer Price Index (CPI) for July 2025
• The Expectation: We expected CPI to speed up from 1.9% y/y to 2.0% y/y, keeping it chill.
• Data outcome: But CPI was like surprise! 💥 Hitting 2.8% y/y, smashing expectations and boasting the top inflation flex in 12 months.
• Market vibes around the time: Neutral feels; traders were sipping tea on Trump’s drama with firing Fed Governor Lisa Cook while staying on the lookout for Nvidia’s earnings and the US core PCE report.

Event Outcome

Australia just came through with a jaw-dropper on the CPI side, popping up to 2.8% yearly, way spicier than the predicted 2.0%. The main drive was hookups about electricity prices tied to when the government decided to surprise everyone with energy bill relief, but underlying inflation wasn't exactly keeping it calm either. 😬

Key points from the Australia CPI report:

• Main inflation was blasting at 2.8% y/y, the highest since it was Trending in July 2024. 📈
• Electricity prices were shocking, surging 13.1% annually compared to a laid-back 6.3% drop before.
• Core inflation levels were like 🏃‍♀️, achieving 3.2% (up from 2.5%).
• Annual trimmed mean editorialized to 2.7% (up from 2.1%)
• Housing vibes stayed steady, being the biggest contributor at 3.6%
• Rent price growth mellowed out to 3.9% yearly, the softest since November 2022.

Australia Bureau of Stats said that without the government hook-ups, electricity prices would've gone YOLO at a 23.0% increase since June 2023. Even though the market kept it low-key at first, the lit inflation trends kept the prospect of RBA chills at bay. 😅

Vibe Check: Bullish AUD vibes activated 🌊🔥

Whole Vibes & Other Drama:

Markets were spinning No Drama Llama kinda week, filled with the Fed being independent, especially after Trump's circus act of trying to dismiss Governor Lisa Cook. Adding to the suspense, it stirred up major iffy vibes about central bank independence and policies. 🤯

The dollar tried to flex but kept dropping despite fire US GDP numbers showing 3.3% growth (hello, 3.0%!). Traders were partly preparing for potential Fed rate cuts. Plus, the Chinese yuan was smashing new records since November 2024, with PBOC dropping solid reference rates, making USD look thirsty through cross-currency flows. 😅

Risk sentiment was riding low-key defensive moods all week long. The whole geopolitical stress situation stayed extra hot with Russia-Ukraine negotiations stalling and drones acting wild. Gold just vibed, prepping towards $3,415, living off the Fed rate cut vibes and safe-haven mood. Oil kept gaining on supply fears, while Bitcoin just hung out tight near $111,500.

Anticipation of Nvidia earnings and the Friday core PCE numbers had traders playing the waiting game, although shady USD making moves due to political drama kept the underlying support for risk assets pretty solid. That made room for some RBA chill expectations to shine through, even while the universe was going risk-off overall. 🌌

Come Friday, the dollar was still aiming for a monthly dip, with core PCE inflation coming through as expected at 0.3% month-over-month. September Fed rate move hopes were holding steady at 85% odds. Treasury yields were all over, with the 10-year nudging up a smidge to 4.22% (but closing the week down a pinch), with gold futures flirting higher to finish the week more than 2.89% up—month-end vibes and a continuous safe-space hankering from Fed independence worries kind of offset everything else. 🤷‍♂️💸

Getting to The Scorecard: How The Game Played Out?

AUD/USD: Bullish AUD Buzz + Go Risk-On Scenarios 🤞 Couldn't have asked for better odds, seriously.

AUD/USD 1-hour Forex Chart by TradingView

Not the right time to vibe beyond Watchlist – Bearish AUD Setups and Long AUD/CAD Setup

AUD/CAD: Bullish AUD Vibes + Risk-Off Scenarios

AUD/CAD 1-hour Forex Chart by TradingView

With the risk scene styling like it wasn’t even phased at release time, AUD/CAD didn’t even get to leave the Watchlist, but it came real close. 😊

Even still, this pair didn’t slack with the bullish AU spark, even if it wasn’t as neat as AUD/USD. It held onto the ascending triangle pattern, grabbing support neat at the 0.8960 pivot point after CPI had its say, just like we said it might. 🧐

The Aussie’s lit inflation stats wrapped up with BOC rate cut thoughts made a dreamy policy split. But, let's spill the tea—CAD may have gotten help from oil price vibes, and they were more chill acting as beta currencies as risk mood vibes improved, reasoning why AUD/CAD spent the week chilling in a tight place.

GBP/AUD Short: Bearish AUD Event Vibes + Risk-On Scene 

GBP/AUD 1-hour Forex Chart by TradingView

The high-key CPI read totally took out this bearish AUD setup from the get-go. The fiercer Aussie inflation tunes combined with UK fiscal shade made GBP/AUD sink from 2.0850 down to the 2.0600 major bragging handle.

While GBP/AUD initially seemed a downer for AUD due to monetary schisms expected, it showed up as a solid win for AUD eventually. Shifts from less dovish BOE impressions to deep UK debt concerns and “picky interest stings” stung were all reminders that keeping a grip on the fundamental shifts and feels is a win in itself since those market narrative plot twists can set up solid intraweek boogies.

AUD/CHF: Bearish AUD Dealings + Risk-Off Scene 

AUD/CHF 1-hour Forex Chart by TradingView

This match just couldn’t step up from beyond the Watchlist, thanks to the rising AUD vibes. Even though times of risk-off moves typically favor the Swiss Franc, the Aussie dollar’s power from lesser RBA tones kept AUD/CHF riding above 0.5200 vibes and pivot zones.

The match eventually pushed closer to the R1 Pivot space and 0.5250 minor psych-mark but fell back Friday with other risk buds as market feels turned darker heading into the weekend. 🧘‍♀️

Final Dish

The Aussie CPI bombshell raised the stakes for more AUD bullish plays, with AUD/USD surfing high compared to the most hopeful crowd-pleaser odds as risk notions were switching gears slowly from meh to yay, and the broader USD feels felt shook following the Trump vs. Fed Governor showdown. 😬

AUD/USD sailed perfectly for the bulls post confirmation, closing the week miles above the event price. You could’ve applied loads of trade management tactics—grab it after a fallback/hold at pivot town or the buy post-resistance breakout success—and still, probably have danced on a positive road thanks to the score for us rating the “AUD/USD Watchlist discussion as having a 'high likely' win feeling.”

Key Gems: