AUD/USD: Bids elusive despite above-forecast Aussie CPI
- AUD/USD in stasis even as Australia’s Q3 CPI beats estimates.
- The data is unlikely to deter the RBA from postponing additional easing.
- With coronavirus cases rising across the globe, the RBA is likely to cut rates next month.
A better-than-expected Australian consumer price index (CPI) inflation data released soon before press time is struggling to draw bids for the Aussie dollar, leaving the AUD/USD pair largely unchanged no the day near 0.7120.
CPI sees stronger rebound
Australia’s CPI rose 1.6% quarter-on-quarter in the third quarter, bettering the estimate of 1.5% following the second quarter’s 1.9% contraction. The annualized figure matched the estimate of 0.7%.
Meanwhile, the Reserve Bank of Australia’s (RBA) trimmed-mean CPI increased 0.4% quarter-on-quarter versus expectations for 0.3% and -0.1% previously. The annualized trimmed measure came in at 1.2%.
Though a welcome development, the upbeat data may not be enough to deter the RBA from reducing rates to a record low of 0.1% from 0.25% in November. That’s because the coronavirus cases are again rising across Europe and in the US and threaten to derail the global economic recovery.
“The continuation of the global recovery is dependent on containment of the virus,” the minutes of the RBA’s October meeting released earlier this month. The minutes added that the jobless rate is likely to remain elevated for an extended period, and the recovery is likely to be slow and uneven, keeping inflation subdued for some time.
As such, the AUD’s dull response to Australia’s upbeat CPI is not surprising. The currency may suffer losses during the day ahead as global stocks are facing selling pressure on prospects of fresh lockdown restriction across Europe.