In a week which was divided into two parts by the ANZAC day holiday on Wednesday, the Aussie Dollar fell steadily and persistently against a rampant US Dollar. AUD/USD began at 0.7675 and without any reversal of note, was sold down to a low around 0.7535 on Friday morning in Europe; its weakest since mid-December. The pair then recovered almost half a cent in the Northern Hemisphere day to end the week in New York at 0.7685. The AUD/NZD cross rate rose from 1.0640 on Monday morning to a high of almost 1.0730 on Thursday before finishing at exactly 1.0700. GBP/AUD, meanwhile, rose from 1.8255 to a high of 1.8460 before plunging on Friday to 1.8175.
The main highlight of the week was the long-awaited Q1 CPI report on Tuesday. Australian CPI figures are just like London buses - you wait ages for one to come along then four come at once! Dealing with all of them in turn, the quarterly increases showed headline CPI up 0.4%, the weighted and trimmed means both up 0.5% and the ‘core CPI’ which the RBA targets also up 0.5%. Whilst the headline rate was unchanged in year-on-year terms at 1.9%, the core rate rose from 1.9% to 2.0%; finally hitting the lower band of the RBA’s 1-3% target range for the first time in two years. The headline rate was very slightly below consensus expectations as seasonal increases in health and utilities were offset by lower retail and international travel prices whilst rents helped lift the core rate. Looking in detail at all the component parts of the CPI, the number of items which rose 0.6% or more during the quarter (and which NAB note correlates well with core inflation) fell from just over 40% to around 35%.
Data from the Australian Bureau of Statistics this week showed that for the first time on record, Sydney’s population grew by more than 100,000 people in one year. Sydney’s population hit 5.1 million at June 2017, an increase of 101,600 people (2 percent) since June 2016. But it was Melbourne that recorded the largest - and fastest growth - of Australia’s capital cities in 2016-17, increasing by 125,400 (2.7 percent) to reach 4.9 million. Together, Sydney, Melbourne and Brisbane accounted for over 70 percent of Australia’s population growth in 2016-17. Darwin, Adelaide and Perth, on the other hand, experienced relatively low rates of population growth, each at 1 percent or less. The AUD ended last week at USD0.7585, with AUD/NZD at 1.0700 and GBP/AUD1.8175.