22 Jan 2014
Flash: AUD/USD gains on CPI data - BTMU
FXstreet.com (Barcelona) - Lee Hardman, FX Strategist at the Bank of Tokyo Mitsubishi UFJ notes that AUD/USD strengthened overnight following better than expected Australian CPI.
Key Quotes
"The Australian dollar has strengthened during the Asian trading session following the release of the stronger than expected Australian CPI report for Q4 2013. The report revealed that the annual rate of headline inflation accelerated to 2.7% in Q4 from 2.2% in Q3. The annual rate of core inflation also accelerated with the trimmed mean and weighted median measures both rising to 2.6%."
"The high core inflation readings highlight that underlying inflation pressures in Australia are higher than the RBA has been expecting. The RBA had expected that the annual rate of core inflation would end 2013 at 2.25%. Instead, the annual rate of core inflation has been running closer towards the top of the RBA’s 2.0-3.0% target band."
"It appears less likely now that the RBA will ease monetary policy further in the near-term, at least potentially until the release of the next Australian CPI report for Q1 on the 23rd April. The reduced likelihood of further RBA monetary easing in the near-term should help to support the Australian dollar."
"Still recent data releases have revealed that economic fundamentals in Australia have become less favourable with higher than expected inflation coinciding with weaker than expected labour market conditions making life more difficult for RBA policymaking, who continue to maintain an easing bias."
Key Quotes
"The Australian dollar has strengthened during the Asian trading session following the release of the stronger than expected Australian CPI report for Q4 2013. The report revealed that the annual rate of headline inflation accelerated to 2.7% in Q4 from 2.2% in Q3. The annual rate of core inflation also accelerated with the trimmed mean and weighted median measures both rising to 2.6%."
"The high core inflation readings highlight that underlying inflation pressures in Australia are higher than the RBA has been expecting. The RBA had expected that the annual rate of core inflation would end 2013 at 2.25%. Instead, the annual rate of core inflation has been running closer towards the top of the RBA’s 2.0-3.0% target band."
"It appears less likely now that the RBA will ease monetary policy further in the near-term, at least potentially until the release of the next Australian CPI report for Q1 on the 23rd April. The reduced likelihood of further RBA monetary easing in the near-term should help to support the Australian dollar."
"Still recent data releases have revealed that economic fundamentals in Australia have become less favourable with higher than expected inflation coinciding with weaker than expected labour market conditions making life more difficult for RBA policymaking, who continue to maintain an easing bias."