Q3 CPI to provide key clues for the RBA

The RBA have emphasized the importance of the Australian Q3 CPI in recent communications and a weak number (below 0.2% qoq on the core inflation read) could see the implied probability of a rate cut increase from 18% to 40-50%.

Source: Bloomberg

Most economists actually expect inflation in Australia to have bottomed and could head higher into the RBA’s projections of 2% into late 2017.

So a quarterly print at or below 0.2% should send AUD/USD into the September lows of $0.7442, while a number at 0.6% or above should solidify the view that the RBA may hold for some time to come.

The information on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG Bank S.A. accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it and as such is considered to be a marketing communication.