Australian inflation for the quarter came in higher than expected at 1.9% (1.6%). On an annualised basis, CPI was 8.4% (7.6%: forecast). The q/q and y/y numbers were also higher than their respective previous prints.
The major contributor to the CPI stems from holiday prices. The AUDUSD has charted a higher trough (HT), followed by a higher peak (HP). This is an uptrend. The spread between the Aussie and US 2-year yields has a higher trough. The leg up hasn't charted yet. To us, this suggests the RBA remains in hiking mode, but at a moderate pace.
It will probably continue to hike rates at 25bps per meeting until it hits its terminal rate. This means an extra one or two more hikes than previous given the upside, but seasonal surprise in the inflation print.
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Senior Market Specialist
Russell Shor joined FXCM in October 2017 as a Senior Market Specialist. He is a certified FMVA® and has an Honours Degree in Economics from the University of South Africa. Russell is a full member of the Society of Technical Analysts in the United Kingdom. With over 20 years of financial markets experience, his analysis is of a high standard and quality.