Australian Inflation Falls to 5.6%

Australian CPI data released a few hours ago showed that annualized Australian inflation has fallen beyond expected to reach 5.6%, reducing the chance of rate hikes and sparking a selloff in the Australian Dollar.

1. Australian inflation data released earlier showed inflation falling more quickly than expected, reaching an annualized rate of 5.6% while 6.1% was expected. This makes rate hikes by the RBA less likely in the near future, and triggered a sharp selloff in the Australian Dollar, with the AUD/USD currency pair reaching a low of $0.6618.
2. Canadian inflation data released yesterday showed annualized inflation falling as low as 3.4%, which was the consensus forecast. This weakened the Canadian Dollar somewhat, with the USD/CAD rebounding from a 9-month low price. The Bank of Canada is still widely expected to hike rates at its July policy meeting.
3. In the Forex market, the USD/JPY currency pair reached a new 7-month high yesterday above ¥144. This has again drawn a response from Japanese authorities who are beginning to worry about the long-term impact of another strong weakening by the Yen, with Japan’s main currency diplomat Kanda tweeting that there will be “an appropriate response to excessive FX moves”. Nevertheless, trend traders will remain interested in being short of the Japanese Yen, which has also reached multi-year lows recently against other currencies such as the Euro and the British Pound.
4. Global stock markets were mixed yesterday, with some fears for tech stocks in the USA as the US mulls imposing restrictions on exports of AI, . Nevertheless, major US stock indices remain technically within strong bullish trends.
5. Bitcoin is still unable to decisively break above the key resistance level at $30,534. If this level continues to hold, a major bearish reversal will become more likely.
6. There will be a panel discussion today at the ECB forum on central banking in Sintra, Italy, at which several central bank heads will be publicly speaking.