The Australian Dollar has found some upside when valued against its US counterpart over the past 24 hours, trading as high as 0.7464 just at the end of the New York session. However, it wasn’t all good news intraday with the release of Australian CPI figures, headline inflation remained flat at 0.4% q/q which was below expectations and headline inflation moved just into the RBA’s target range of 2-3% at 2.1% y/y. The trimmed mean which is the RBA’s preferred measure edged down 0.5% q/q while was on a y/y basis at 1.9% y/y – still just under the target band hence why we initially saw a high of 0.7448 just after 11.30 AEST and then a quick pullback thereafter. Traders continued to sell the Aussie and as we closed the Asian session and we were back under 74c again. Market pricing is implying that the cash rate will remain unchanged for a considerable period of time, with a less than 50% chance of a hike in the next 12 months.
The local unit buoyed by risk appetite in the markets after Trump and EU Junker struck a deal to increase trade, reduce tariffs and costs, and increase U.S. farm and natural gas exports to Europe in order to avert an all-out trade war between the two.
Looking ahead, we have the release of Import Prices by the Australian Bureau of Statistics which measures the change in the price of goods purchased by importers. The data contributes to inflation for both businesses and consumers. We are expecting to see an increase on 1.9% on the previous 2.1% while the Export Price Index is expected at 3.9% (previous 4.9%). The data is unlikely to drive much action, support sitting at 0.7400 and resistance up at 0.7490.