22 Jan 2014
Flash: RBA watching very closely today's Aus CPI release - Westpac
FXstreet.com (Bali) - Australia’s data highlight is Q4 CPI at 00.30 GMT, with the main focus on the average of the two underlying inflation measures as the number the RBA should be watching most closely, notes Sean Callow, FX Strategist at Westpac.
Key Quotes
"We look for this to print at 0.7% q/q (2.4% y/y), just above consensus for 0.6% (Q3 was 0.6%). Housing should be the key driver of underlying inflation, with backing from fruit & vegetables, while negative offset should come from components including petrol prices and pharmaceuticals. Westpac’s headline inflation forecast is 0.6% q/q, 2.6% y/y, also above the median forecast of 0.4%. (There is also a seasonally adjusted measure, which we see up 0.7%)."
"A number around our expectation should further dampen RBA rate cut talk stirred by the Dec jobs data and produce a modest pop on AUD/USD. While above the market for Q4 13, Westpac sees underlying inflation remaining muted in 2014, around the middle of the 2-3% target range, not a likely worry for the RBA this year."
"An hour before the CPI we will see Australia’s Jan consumer sentiment survey from Westpac and the Melbourne Institute. Dec saw a disappointing -4.8% slide, making it 2 falls out of 3 months since the election bounce. The index’s 105 reading in Dec was just below the 106 average of the past 20 years. January surveys are seasonally adjusted to account for Australians’ enjoyment of summer holidays."
Key Quotes
"We look for this to print at 0.7% q/q (2.4% y/y), just above consensus for 0.6% (Q3 was 0.6%). Housing should be the key driver of underlying inflation, with backing from fruit & vegetables, while negative offset should come from components including petrol prices and pharmaceuticals. Westpac’s headline inflation forecast is 0.6% q/q, 2.6% y/y, also above the median forecast of 0.4%. (There is also a seasonally adjusted measure, which we see up 0.7%)."
"A number around our expectation should further dampen RBA rate cut talk stirred by the Dec jobs data and produce a modest pop on AUD/USD. While above the market for Q4 13, Westpac sees underlying inflation remaining muted in 2014, around the middle of the 2-3% target range, not a likely worry for the RBA this year."
"An hour before the CPI we will see Australia’s Jan consumer sentiment survey from Westpac and the Melbourne Institute. Dec saw a disappointing -4.8% slide, making it 2 falls out of 3 months since the election bounce. The index’s 105 reading in Dec was just below the 106 average of the past 20 years. January surveys are seasonally adjusted to account for Australians’ enjoyment of summer holidays."