The Australian Bureau of Statistics (A.B.S.) reported that the consumer price index (C.P.I.) for the quarter through December 2011 was unchanged...
The Australian Bureau of Statistics (A.B.S.) reported that the consumer price index (C.P.I.) for the quarter through December 2011 was unchanged from the previous quarter (ending September 2011). This was lower than economists had predicted at a 0.2% increase and a better rate has not been seen since December 2008 when the figure depreciated. According to A.B.S., the largest increases were in holiday travel & accommodation at a 7.3% increase, beer gained 1.2%, telecommunication equipment & services appreciated 1.1%, rents rose by 1.0%, and automotive fuel increased 0.7%. Furthermore, the largest decreases were fruit which fell by 13.4%, pharmaceutical products lowered 5.6%, vegetables depreciated 5.0%, audio, visual and computing equipment reduced 3.4%, international holiday travel and accommodation trimmed off 1.9%, and motor vehicles went down by 1.2%.
The trimmed mean measure that the R.B.A. uses to decide if an additional rate cut should be implemented went up by 2.6% from the previous year. This was greater than the 2.4% projected by economists. The number fell within the central banks target 2%-3% range although it revealed further moderations of price pressures had occurred which call for an additional rate cut.
Annualized C.P.I. came in at 3.1% compared to the year earlier. This was lower than the expected 3.3% increase projected by analysts. Seasonally adjusted, C.P.I. increased 0.2% for the quarter ending December (2011) and 3.0% for all of 2011.
The better than expected C.P.I provided that inflation was contained within the quarter and gave a boost to the Aussie. Additionally, expectations for the Reserve Bank of Australia (R.B.A.) to provide an additional rate cut in their February 7th meeting remain. The central bank reduced interest rates to 4.25% in November and December.
The AUDUSD has continued to rally higher despite market expectations of a rate cut. The Australian economy is one of the best performing economies and still attracts capital flow from investors who are looking for higher yield. If the pair bounces off support at 1.0450, we expect the pair to target 1.0600.
Eugene Ross, Analyst
Admiral Markets
At any use of the analytical material taken from a site of company Admiral Markets, and the secondary publication on any other resources, the rights to intellectual property for a dealing center «Admiral Markets», the reference to a company site is obligatory.
