Australia's annual inflation eased to 3.8% in June, below the 4.1% forecast and down from 4% in May. The trimmed mean measure of underlying inflation held steady at 3.6%, still above the RBA's target range.

Markets sharply reduced bets on an August rate hike, with the probability falling from 19% to just 3%, according to Bloomberg data. The RBA is now widely expected to keep the cash rate at 4.35% at its August 11 meeting. However, expectations for a December hike rose to 81%, and a February 2027 increase to 96%.

The Australian dollar dropped about 0.3% to 69.5 US cents as traders pared back rate-hike bets. Meanwhile, wholesale electricity prices fell 47% to $74/MWh in Q2 2026, driven by record renewable generation and battery storage. The ASX 200 rose 1.3% ahead of the data release.