Australia: The Australian dollar has opened lower this morning following a bout of risk aversion trading overnight.

Early yesterday the AUD looked poised to rally to USD0.9100 after hitting an overnight high on Tuesday night of USD0.9069.

However, weaker than expected CPI results soon dampened that prospect and the AUD fell almost 1 US cent following the data release.

The figures showed that headline CPI rose 0.6% in the June quarter, for an annual rate of 3.1%, while the underlying rate of inflation rose by 0.5% in the quarter to an annual rate of 2.7%, falling within the RBA's target band of 2-3%.

The median market forecast for headline CPI was a quarterly rise of 1.0% for a yearly rate of 3.4%.

The lower inflation result has knocked the prospect of the Reserve Bank of Australia lifting the  cash rate next Tuesday, August 3.

This is likely to weigh on the AUD today, along with last night's weaker than expected data in the US.

Support for the AUD is currently around USD0.8900, while the AUD may struggle to get back above USD0.9000 in the short-term.

Majors: The USD fell against the JPY and was little changed against the other major crosses  Wednesday night in a fairly quiet session.

Some disappointing economic data combined with a lacklustre Federal Reserve report on the economy weigh on the USD and equity markets.

The Fed's beige book revealed that US economic activity rose only modestly in June and the first half of July, while Durable goods (items such as planes, cars and computers) fell by 1% in June. Analysts had forecast a 1% gain.

The Dow Jones industrial average closed down 0.38%, breaking its four day winning streak.

Spot gold rose as the appetite for risk waned, while oil fell on the negative US data.

The market will now be watching upcoming Q2 GDP figures in the US Friday night, while tonight we have initial jobless claims for the week of June 24.

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