The Aussie took a hit across the currency board yesterday in response to weaker than expected CPI figures. The expectation was that the quarterly and the year on year inflation figures would be 0.8% and 3.2% respectively. The targeted inflation figures fell short, coming in at 0.6% and 2.9%, resulting in a selloff of the AUD. It lost approximately 1% against all the majors and has been the first real sign of weakness the currency has seen over the past month.
The Bank of England Minutes were released last night which suggested that the UK economy is picking up speed, however the policymakers did expect a minor slowdown in the April-June period. Earlier this morning Governor Wheeler announced that the Reserve Bank of New Zealand have increased the official cash rate as expected, from 2.75% to 3%. This has resulted the New Zealand Dollar strengthening slightly this morning.
There is little to no data left for release this week regarding the domestic currency. Later today the Swiss will release their Trade Balance figures while the States will release data surrounding Durable Goods Orders. The major announcement left to occur this week internationally will occur out of Japan tomorrow morning. The land of the rising sun is set to see a rise to their CPI figure which should see the Yen strengthen slightly. Retail sales figures will finish off the release of data out of the UK this week.
Moving forward to next week, there is not a great deal of economic data set to be released to support the AUD. With that said though, it may be a case of no news being good news and could allow the Aussie some time to recover slightly from yesterdays’ loss. Earlier in the year we saw the AUD gain strength and momentum against most currencies without the support of strong data. This suggests that even though the Aussie Dollar has taken a hit and lacks the support of strong economic data next week, it is still possible that we may see some form of recovery of the next week and hence, it may be down, but it’s certainly not out.