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29/05/24
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AUD Flat Despite Higher-Than-Expected CPI
On Wednesday, the Australian dollar showed limited movement, and AUD/USD traded at about 0.6647, 0.02% lower for the day in the European session.
On Tuesday, Australian retail sales were lower than anticipated and the inflation report today was higher than expected, but neither release affected the sleepy Australian dollar much, and it has drifted since Monday.
In April, Australia’s CPI lifted by 3.6% y/y, from March’s 3.5% and was higher than the market consensus of 3.4%. That was the highest reading since Nov. and was mainly due to higher clothing and food prices. Core CPI, excluding energy and food, stayed unchanged at 4.1%.
This was the second consecutive month that CPI accelerated and was higher than the estimate. This could lead to the Reserve Bank of Australia reason delaying rate cuts. Although the RBA has managed to slash inflation, it is having difficulty in the final stretch as the target of between 2% and 3% remains out of reach.
The RBA has kept the cash rate at 4.35% for 4 consecutive times and is likely to hold again at the meeting on June 18. Although RBA policymakers will not be happy with the inflation report it will not likely result in a rate hike.
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