The Australian, US and New Zealand economies all reported on their inflation levels over the past 24 hours, with 2 of the 3 economies posting a reduction to their Consumer Price Index.
Yesterday the Australian economy released their official inflation rate and the result was exactly as expected, causing little volatility following the announcement. The annualised Australian CPI figure of 3% for the previous quarter was at the high end of the Reserve Bank of Australia’s targeted 2-3% range, however, the economic expectation for the third quarter was that the inflation rate would decrease to 2.3%. The forecasted figure came to fruition, meaning that the Australian Dollar experienced only minor positive movements throughout the Australian trading session.
Overnight the Bank of England Minutes were quite dovish with only 2 out of the 9 policy makers voting in favour of an interest rate hike, indicating that perhaps the interest rate rise is being postponed in light of lowering inflation levels. This provided the opportunity for the AUD to strengthen against the Pound by increasing its’ value by over half a percent. Tonight the UK will report on the percentage change of the volume of Retail Sales, with economists targeting a contraction from 4.5% to 3.4%.
Last night the US also reported on their inflation levels which were currently sitting at 1.7%. The annualised CPI figure for the month of September was expected to decrease slightly to 1.6%, however the inflation rate remained at 1.7% and caused the AUD to USD exchange rate to return back down to where it opened the previous day.
The Bank of Canada Rate Decision was announced overnight and there were no surprises that the official cash rate was kept on hold at 1.00% considering there has been no movement to this rate in over 4 years now. Canadian Retail Sales figures for the month of August were stagnant, indicating no growth. Although the Canadian economy had a rather lacklustre night of economic releases, the ‘Loonie’ held its’ current value to remain ahead of parity against the ‘Aussie’.
This morning New Zealand had their turn in releasing their inflation rate and they too continued with the trend of a decreased CPI figure. Economists were expecting the inflation rate in New Zealand to reduce to 1.2% from the previous 1.6% annualised figure and the result was lower than expected, with a printed figure of 1%. This caused the New Zealand Dollar to lose over a full percent against the ‘Aussie’. Tomorrow morning the New Zealand Trade Balance figure will be the most significant economic release in swaying the value of the ‘Kiwi’, which is currently under significant downward pressure.