Get 40% Off
⚠ Earnings Alert! Which stocks are poised to surge?
See the stocks on our ProPicks radar. These strategies gained 19.7% year-to-date.
Unlock full list

Australian CPI Signals No Rate Cuts From RBA

Published 10/26/2016, 06:43 AM
Updated 07/09/2023, 06:31 AM

Market Drivers for October 26, 2016

  • AU CPI runs hotter
  • Dollar drops across the board
  • Nikkei 0.15% DAX -1.08%
  • Oil $49/bbl
  • Gold $1274/oz.

Europe and Asia
AUD: CPI YoY 1.3% vs. 1.1%
EUR: GE Import Prices -1.8% vs. -1.9%

North America
USD: Goods Trade Balance 8:30
USD: Services Flash PMI 9:45
USD: New Homes Sales 10:00

The dollar was lower across the board with EUR/USD handily rising above the 1.0900 figure in Asian and early European trade as several days of dollar rallies triggered some profit taking against the buck.

In Australia the CPI data printed hotter than expected, sparking a massive rally in the Aussie that took the unit through the .7700 figure before sellers reappeared. The headline CPI came in at 1.3% versus 1.1% as weather related issues caused a rise in food prices and the climb in crude hiked energy costs as well.

On a core basis the inflation readings were more subdued coming in at 1.3% versus 1.4%, but the data was strong enough to convince traders that the RBA will likely remain stationary for the rest of the year. Last week's surprisingly weak labor readings created some concern that the RBA may do a surprise rate cut in November in order to stimulate the economy, but as many analysts have noted, given the generally robust GDP figures and now the mildly hotter CPI data there is little reason for RBA to ease this year and that consensus view should prop up the Aussie for the time being.

There was no data in EU session, but after two days of shellacking the euro finally found a bid, rising to a high of 1.0933 in morning London dealing. The data from the EZ has consistently surprised to the upside this week, indicating that a lower euro is helping to fuel export demand and stimulate growth in the region. Today's move is a natural short covering rally and could lift EUR/USD through the 1.0950 level as the day proceeds.

On the US calendar the docket carries US New Home Sales and flash PMI Services data which is unlikely to have much impact on the market. And prices are likely to remain in relatively tight ranges albeit with a slight skew to the greenback as profit taking continues.

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.