22 Jan 2014
Flash: Aus CPI reduces chances RBA cut, AUD/USD shorts should be trimmed - Westpac
FXstreet.com (Bali) - According to Westpac, Q4 13 saw the biggest surprise relative to consensus on core inflation since 2010, with numbers back above the midpoint of the RBA target band.
Key Quotes
"This compared to median 0.6% and Westpac 0.7%. The details indicated that the price strength wasn’t broad-based, with numerous components very close to our expectations and clothing/footwear even a little softer despite the AUD decline."
"The main culprits were in “recreation and culture”, up 2.1%, with a steep rise in domestic holiday prices (6.9%) particularly to blame. A smaller than expected fall in the transport category also contributed."
"This outcome obviously reduces the chances of another RBA rate cut, with pricing slashed from -16bp by Jul/Aug to just -6bp. However, the RBA is not expecting rapid growth this year and wages growth is still very muted so they will not panic over this report."
"AUD/USD squeezed from 0.8790 pre-data to 0.8850 then as high as 0.8870. The overall mood on AUD has been mixed at best so we will have to see if the Aussie is able to close the day above key technical resistance at 0.8865/70, which could extend as far as 0.9080."
"With the local calendar now fairly light in coming days, AUD/USD shorts should be trimmed somewhat, leaving the pair higher even if bears trim the scope of the rally. The initial target would be 0.8925/50."
"At the very least, the CPI data will help support AUD on crosses and add to the tension on AUD/NZD into next week’s RBNZ decision."
Key Quotes
"This compared to median 0.6% and Westpac 0.7%. The details indicated that the price strength wasn’t broad-based, with numerous components very close to our expectations and clothing/footwear even a little softer despite the AUD decline."
"The main culprits were in “recreation and culture”, up 2.1%, with a steep rise in domestic holiday prices (6.9%) particularly to blame. A smaller than expected fall in the transport category also contributed."
"This outcome obviously reduces the chances of another RBA rate cut, with pricing slashed from -16bp by Jul/Aug to just -6bp. However, the RBA is not expecting rapid growth this year and wages growth is still very muted so they will not panic over this report."
"AUD/USD squeezed from 0.8790 pre-data to 0.8850 then as high as 0.8870. The overall mood on AUD has been mixed at best so we will have to see if the Aussie is able to close the day above key technical resistance at 0.8865/70, which could extend as far as 0.9080."
"With the local calendar now fairly light in coming days, AUD/USD shorts should be trimmed somewhat, leaving the pair higher even if bears trim the scope of the rally. The initial target would be 0.8925/50."
"At the very least, the CPI data will help support AUD on crosses and add to the tension on AUD/NZD into next week’s RBNZ decision."