Talking Points:

  • Australia’s consumer inflation expectations at 4.3% from 3.8% in September
  • The Australian Dollar received a modest boost as the survey crossed the wires
  • Not to fear, higher price concerns might be subdued according to the RBA

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The Australian Dollar enjoyed a small boost after the Melbourne Institute of Applied Economic and Social Research inflation survey crossed the wires. The data showed that expectations for the next 12 months are anchored at 4.3% from 3.8% in September.

In addition, the proportion of participants that expect prices to rise increased to 62.8% from 58.4%. Just 19.8% envision inflation to stay the same while only 3.8% think it is going to fall.

For those concerned about higher prices, fear not, the Reserve Bank of Australia has a counter argument. As we found out last week from their monetary policy announcement, the RBA said that a higher exchange rate is expected to contribute to continued subdued price pressures.

Whether or not the consumer price index follows inflation expectations or the central bank’s worries, we will find out on October 25th during the third quarter CPI release.

Meanwhile, the IG Client Sentiment Index showed that traders are further net-long than yesterday and from last week. The combination of current sentiment and recent changes produced a stronger AUD/USD bearish contrarian trading bias.

Australian Dollar Gets a Boost From Higher Inflation Expectations