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The AUD/USD is trading at $0.9281, down 0.9%, after Australia announced weaker-than-expected consumer price index (CPI) figures. The rate of inflation came in at 0.6% for the first quarter of 2014, and analysts were expecting a reading of 0.8%.
As I mentioned last week, the Australian dollar pushed above the $0.94 mark after the level of unemployment in Australia dropped to 5.8%. The weaker CPI figures would suggest that those now in employment are saving more than they are spending. The Aussie was driven below the $0.93 mark as traders locked in their profits from the gains made in recent weeks.
As Stan Shamu stated, the poor HSBC Chinese manufacturing report didn’t give traders a reason to buy back into the Australian dollar after the soft CPI numbers.
At 3pm (London time), the US will announce the latest new homes report. If the figures are worse than the 455,000 expected, we could see bargain hunters push the Australian dollar towards the $0.9360 level.