News & Analysis at your fingertips.

We use a range of cookies to give you the best possible browsing experience. By continuing to use this website, you agree to our use of cookies.
You can learn more about our cookie policy here, or by following the link at the bottom of any page on our site. See our updated Privacy Policy here.

0

Notifications

Notifications below are based on filters which can be adjusted via Economic and Webinar Calendar pages.

Live Webinar

Live Webinar Events

0

Economic Calendar

Economic Calendar Events

0
Free Trading Guides
Subscribe
Please try again
More View more
Real Time News
  • Forex Update: As of 16:00, these are your best and worst performers based on the London trading schedule: 🇳🇿NZD: 0.71% 🇦🇺AUD: 0.53% 🇨🇭CHF: 0.35% 🇬🇧GBP: 0.19% 🇪🇺EUR: 0.11% 🇯🇵JPY: 0.11% View the performance of all markets via https://www.dailyfx.com/forex-rates#currencies https://t.co/o4Bg5hW0tn
  • #Oil Technical Forecast: Oil Eight-Week Rally Vulnerable- $WTI Levels ($USOil) - https://t.co/32p8cbyZVr https://t.co/PPWB11MbRh
  • Indices Update: As of 16:00, these are your best and worst performers based on the London trading schedule: Wall Street: 0.45% US 500: 0.40% France 40: 0.01% Germany 30: 0.00% FTSE 100: -0.10% View the performance of all markets via https://www.dailyfx.com/forex-rates#indices https://t.co/brXwszjzBv
  • RT @jason_donner: Pelosi on if a framework can be reached by end of week: “Let’s see…we have met every milestone along the way in our timet…
  • RT @breakingmkts: *PAYPAL SAID TO EXPLORE PURCHASE OF SOCIAL MEDIA FIRM PINTEREST $PYPL $PINS
  • Wondering if $MS will drop its fire and ice scenario at some point or continue to call for a major pullback in stocks? #trading $SPX $DJI $RUT
  • Risk appetite is on the hunt for record highs to start the New York session with Bitcoin hitting the mark at $66,000 and the S&P 500 within easy reach of 4,545. DailyFX's @JohnKickligther discusses what is ahead today! https://t.co/HRDercEcMU
  • $DJIA about to hit its all time high https://t.co/dX26Ib4Bbc
  • Forex Update: As of 14:00, these are your best and worst performers based on the London trading schedule: 🇳🇿NZD: 0.68% 🇦🇺AUD: 0.49% 🇨🇦CAD: 0.36% 🇬🇧GBP: 0.15% 🇪🇺EUR: 0.11% 🇯🇵JPY: 0.07% View the performance of all markets via https://www.dailyfx.com/forex-rates#currencies https://t.co/JfRnr21NMZ
  • Indices Update: As of 14:00, these are your best and worst performers based on the London trading schedule: France 40: 0.59% Wall Street: 0.43% US 500: 0.39% FTSE 100: 0.08% Germany 30: -0.02% View the performance of all markets via https://www.dailyfx.com/forex-rates#indices https://t.co/nCnqh3uZfw
Australian Dollar Gains As 4Q CPI Inflation Beats Expectations

Australian Dollar Gains As 4Q CPI Inflation Beats Expectations

David Cottle, Analyst

Australian Dollar, Consumer Price Index Talking Points:

  • Headline Australian inflation came in quite strongly, accelerating for a fourth quarter.
  • However underlying price power remains highly restrained
  • Still, Aussie bulls liked the data, and suspect that no rate cut will come next month

Join our analysts for live, interactive coverage of all major economic data at the DailyFX Webinars. We’d love to have you along.

The Australian Dollar rose Wednesday following the release of official Consumer Price Index data which showed overall prices rising at their strongest pace for a year.

The 1.8% increase was still below the Reserve Bank of Australia’s longer-term 2-3% target. The rate has not been in that band since 2017. But the uptick from the third quarter’s 1.7% marks a fourth straight quarter of acceleration and is likely to be welcomed by the central bank.

However the ‘trimmed mean’ measure which attempts to strip out volatile price components in the same way that ‘core inflation’ measures do elsewhere in the world remained stuck at the 1.6% rate it has now hovered at for five quarters. Pricing power is clearly still extremely restrained. This may account for the currency's quite limited response to the headline figure.

Still, the RBA will give its first monetary policy decision of this year on February 4. Market pricing swung around to quite emphatically price out any chance of a reduction in the record-low, 0.75% Official Cash Rate in the wake of last week’s strong rise in headline job creation, even though part-time roles accounted for all of the increase seen.

These inflation data are unlikely to change the prognosis that rates will be staying put, with the RBA’s ‘gentle turnaround’ thesis on the economy still highly defensible. Obviously, the central bank wants to see inflation a little higher and employment a little lower, but both metrics seem to be heading in that direction.

AUD/USD rose as the ‘no change’ prognosis has clearly survived this last major domestic data cue before the central bank meets.

Australian Dollar Vs US Dollar, 5-Minute Chart

On its daily chart the Australian Dollar is back to lows not seen since late 2019 against its US big brother. The growth-correlated Australian Dollar has been hard hit by fears around the spread of Wuhan-strain coronavirus out of China. The currency is exposed to broad ‘risk off’ sentiment which invariably accompanies this news but also, more specifically to worries about the effects of the virus on both Chinese growth and travel in the Asia Pacific region.

Australian Dollar Vs US Dollar, Daily Chart

The Aussie got a big lift into 2020 as market hopes for a US-China trade deal and a relatively soft exit for the United Kingdom from the European Union buoyed all such risk on assets.

However the picture has clearly altered markedly before 2020’s first month is out of the way. Coronavirus aside a substantive trade settlement between the world’s economic superpowers will clearly take a long time, if it’s achievable at all, and the post Brexit trade settlement between the UK and the European Union is likely to see some torturous negotiations. In short the international environment remains highly uncertain, with global growth hardly stellar and central bankers low on stimulus ammunition.

This is not a backdrop conducive to gains for the Australian currency even if domestic interest rates head no lower next month.

Australian Dollar Resources for Traders

Whether you’re new to trading or an old hand DailyFX has plenty of resources to help you. There’s our trading sentiment indicator which shows you live how IG clients are positioned right now. We also hold educational and analytical webinars and offer trading guides, with one specifically aimed at those new to foreign exchange markets. There’s also a Bitcoin guide. Be sure to make the most of them all. They were written by our seasoned trading experts and they’re all free.

--- Written by David Cottle, DailyFX Research

Follow David on Twitter@DavidCottleFX or use the Comments section below to get in touch!

https://www.dailyfx.com/free_guide-tg.html?ref-author=Cottle.

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

DISCLOSURES