Forex Flash: Upside risks on core Australia CPI may support the AUD/USD - Westpac
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FXstreet.com (Barcelona) - Westpac is looking for a headline CPI reading below consensus "but the core measure to be on the high side, providing another reason for the RBA to hold steady in Feb" the bank says.
Westpac FX analyst Sean Callow, notes: "We look for 0.2% q/q, 2.3% y/y headline, vs median 0.4% q/q, 2.4% y/y. Seasonality is helpful in Q4 (especially pharmaceuticals as govt rebates peak) while fruit & vegetables prices should have fallen almost 10%. But the RBA's focus as usual will be on the underlying measures."
Sean adds: "Westpac expects an average 0.8% q/q, 2.6% y/y of the weighted median and trimmed mean CPI, with consensus 0.6-0.7%. Of the 0.8% we expect, 0.1ppt should be due to the ongoing impact of the carbon tax. The RBA should look through this, though the ABS won't publish an inflation ex-carbon tax measure. The upside risks on core CPI relative to consensus suggest some support for AUDUSD on the release, though probably not quite through 1.0600."
Westpac FX analyst Sean Callow, notes: "We look for 0.2% q/q, 2.3% y/y headline, vs median 0.4% q/q, 2.4% y/y. Seasonality is helpful in Q4 (especially pharmaceuticals as govt rebates peak) while fruit & vegetables prices should have fallen almost 10%. But the RBA's focus as usual will be on the underlying measures."
Sean adds: "Westpac expects an average 0.8% q/q, 2.6% y/y of the weighted median and trimmed mean CPI, with consensus 0.6-0.7%. Of the 0.8% we expect, 0.1ppt should be due to the ongoing impact of the carbon tax. The RBA should look through this, though the ABS won't publish an inflation ex-carbon tax measure. The upside risks on core CPI relative to consensus suggest some support for AUDUSD on the release, though probably not quite through 1.0600."
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