Forex Today: Australian Inflation Runs Hot

Annualized Australian inflation unexpectedly rose from 6.3% to 6.8%, increasing the case for further hikes from the RBA, sending the Aussie to a 6-month low against the US Dollar.

1. Australian inflation data released a few hours ago showed Aussie CPI running unexpectedly hot, presenting an annualized inflation rate increasing from 6.3% to 6.8% when it had been expected to increase only very marginally, to 6.4%. This will increase the probability of further rate hikes from the RBA. Following the release, the Aussie is falling with notable bearish momentum, with the AUD/USD currency pair trading at a 6-month low price.
2. The US debt limit deal has been passed by a congressional committee, sending the deal for a full vote of the House. It is strongly expected to pass.
3. The Chinese stock market is falling strongly, with the HSI trading at a new 6-month low, acting as a drag on global stock markets, most of which declined yesterday. However the NASDAQ 100 Index reached a new 1-year high yesterday before selling off later in the session.
4. In the Forex market, the US Dollar is rising again, against its long-term bearish trend. Action has been dominated so far today by weakness in the New Zealand Dollar and strength in the Japanese Yen. However, trend traders will probably still be looking for long trades in the USD/JPY currency pair which recently reached a new 6-month high price while short NZD/USD and AUD/USD will also be attractive. The Kiwi remains weak after the RBNZ last week signalled that its terminal rate had been reached in a surprise move.
5. Yesterday’s release of US CB Consumer Confidence data came in slightly better than expected.
6. There will be a release later today of German Preliminary CPI (inflation) data, which is expected to show month-on-month inflation falling from 0.4% to 0.2%.
7. There will be a release later today of Canadian GDP data, which is expected to show a small monthly decrease in economic growth, by 0.1%.
8. There will be a release later today of US JOLTS Job Openings data.