Aussie Dives After Weak Inflation, FOMC Awaited

Published 04/27/2016, 04:45 AM
Updated 03/09/2019, 08:30 AM
AUD/USD
-

Aussie tumbles sharply in Asian session after much weaker than expected inflation data. Headline CPI dropped -0.2% qoq in Q1 versus expectation of 0.2% qoq rise. Annually, CPI slowed to 1.3% yoy, down from 1.7% yoy and was sharply below expectation of 1.8% Yoy. The RBA trimmed mean CPI came in at 0.2% qoq, 1.7% yoy, below expectation of 0.5% qoq, 2.0% yoy. RBA weighted mean CPI rose 0.1% qoq, 1.7% yoy, also well below expectation of 0.5% qoq, 2.0% yoy. Markets react to the data by sharply increasing the pricing of the chance of a rate cut by RBA in May. Cash rate futures are around pricing in around 50% odds of a 25 bps cut, comparing to around 13% odds of cut prior to the data. Technically, it should be noted that last week's high of 0.7833 in AUD/USD was close to an important medium term fibonacci level. And, today's breach of 0.7630 support is taken as a sign of trend reversal.

Released elsewhere, New Zealand trade surplus narrowed to NZD 117m in March, below expectation of NZD 405m. Japan all industry activity index dropped -1.2% mom in February, slightly better than expectation of -1.3% mom. German Gfk consumer sentiment rose to 9.7 in May versus expectation of 0.5. Swiss UBS consumption indicator dropped to 1.51 in March. UK GDP will be the main focus in European session and index of services, CBI reported sales will also be featured. Eurozone will release M3 money supply. US will release trade balance and pending home sales in early US session.

But the main focus will be on FOMC rate decision. Fed is widely expected to kept policies unchanged but the accompanying statement will certainly be scrutinized for clues about June hike. A key is the voting and whether Kansas City Fed president Esther George would be joined by others to vote for a hike this time. There are speculations those might include Cleveland Fed president Loretta Mester and St. Louis Fed president James Bullard. Also, attention will also be on Fed's view over balance of risks, in particular, growth outlook as affected by global developments. Besides, Fed's view on inflation outlook would be watched for any updates on recent jump in oil prices.

Latest comments

Loading next article…
Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2025 - Fusion Media Limited. All Rights Reserved.