Market Highlights
- Local PPI lower than expected
- USD gains 1% against EUR
- German consumer confidence falls
Earlier in trade yesterday the ABS released a weaker than expected Producer Price Index. The 0.1% gain eased speculation that the RBA will lift interest rates by 50 basis points next month. The Consumer Price Index will be watched closely and if it follows suit with a softer result than expected we may see the Aussie tumble. The annual pace is expected to come in at 1.2% which is well below the RBA’s target inflation range of 2-3%.
The Aussie struggled after the news but was supported by a report from China suggesting authorities should look to diversify their reserves by holding more Euro and Yen. This led to investors selling the greenback in favour of EUR and AUD. This helped the Aussie push back above 0.9200 and head to a top near 0.9250.
A slip in oil and weaker equity markets dragged the Australian dollar lower overnight as investors dumped growth currencies in favour of the USD. After closing above 0.9200, the Aussie lost over a cent against the greenback during the New York session.
The Aussie will receive little guidance today as there is no local data being released. Tonight the US will release consumer confidence numbers for October. If the result comes in above expectations we could see the Aussie fall back towards 0.9100. We encourage you to assess your current position and perhaps look at forward cover to protect against further falls in the market. Please speak to your dealer for further information.
By Michelle Dri, Senior Corporate FX Dealer
