Talking Points:
- The Aussie Dollar fell by 0.7 percent against its US counterpart
- Australian CPI grew 1.5 percent YoY vs the 1.7 percent forecast
- Stagnant CPI data fuels speculation of an imminent RBA rate cut
Macroeconomic events affect currency valuations. Stay updated with major releases on our calendar.
The Aussie Dollar declined against its US counterpart as Australian CPI data crossed the wires below the markets’ consensus forecast. The headline year-on-year inflation rate printed at 1.5 percent in the third quarter. This matched the second quarter’s reading but fell below the 1.7 percent expectation. On a quarterly basis, prices grew 0.5 percent, falling short of the 0.7 percent gain estimated by economists. The prior reading for this gauge was 0.7 percent.
Australian two-year government bond yields declinedalongside the currency. This hints that the markets interpreted the soft CPI data to mean that an imminent RBA interest rate cut is now more likely. Traders are pricing in a 91 percent probability that the central bank will cut interest rates by 25 basis points at its November 3rd meeting. That is the highest level of conviction in on-coming easing in five months.
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