At a glance Australian CPI figures come out green with inflation rising 0.7% last quarter which is better than the forecast of 0.4%. This 3rd quarter brings inflation to 1.3% and at this stage remains very unlikely it will reach the inflation target set by the RBA of 2-3% . It is looking unlikely to even hit the 2% mark. Historically since 2002 cpi has been trending down making consistently lower highs and we expected this to continue throughout 2017.
Due to bad weather hitting farmland all around the country, has contributed to a short supply in fresh food. Looking at the figures, if fresh food hadn’t been in short supply CPI may have been closer to or even at 0.0%.
In the first quarter Food and non-alcoholic beverage came in at -.02% and second quarter at -.03%. This quarter it came in at 1.7%, which is quite a significant turn around in the current trend. If food and non-alcoholic beverages had come in at the current trend rates the data would not look too good at all.
Alcohol and tobacco was again a main driver of current inflation.
Forex trading for profit has gone short on the Aussie at .76900 SL at .77800. Morgan Stanley has also announced they have gone short with a take profit of .65xxxx. With employment transitioning from full time to part time positions, and very subdued inflation trends continuing though next quarter, another rate cut is looking likely.
It will be touch and go for a rate cut next week, since CPI did come out better than expected. It may just be reason enough for the RBA to play a wait and see until the next lot of data is released.
For an uptrend to commence on AUD/USD price must past the highs of April 2016. This was a former resistance level back in June 2015.