Market Update – 24th April 2018 – Inflation Figures Due At 11.30AM As AUD Remains On The Backfoot

As suggested could happen in my report on Friday the Aussie dollar has continued to sell off across the board and particularly versus the Greenback where it now sits hovering just above 0.7600 after holding above 0.77 for the the best part of March and April. The reason I provided for the more bearish view was the simple fact that interest rates in the U.S are going up far quicker than here in Australia where interest rates remain around 1.5%. Despite rates being artificially low, the RBA at this point seems unwilling to move interest rates until forced by rising inflation because of fears higher interest rates could further intensify a sell off in property prices and raise interest repayments for many indebted property speculators and owners. Having said that exporters would be well served to take advantage of current rates following the 2 cent-odd correction.

No data was released yesterday or overnight, but the latest local Aussie CPI figures are out this morning. Markets are expecting to see quarterly inflation around 0.5%, but anything above that could see a swift rise in the AUD in anticipation of a change in tone from the RBA on interest rates. Inflation is now tracking around 2% annualized which is at the lower end of the RBA’s 2-3% target. Should we see annualized inflation move well into the 2% range we could see a shift in the RBAs thinking and an eventual rate hike start to be penciled in perhaps as early as later this year. Watch this space.

AUD EXCHANGE RATES:

AUD/USD – 0.7604

AUD/GBP – 0.5454

AUD/EUR – 0.6227

AUD/NZD – 1.0627

AUD/JPY – 82.675

USD/BTC – $8,906

OTHER MARKETS: 

All Ords (XAO) – 5,976

Gold – A$1742/oz

Silver –  A$21.88/oz

WTI – US$68.82/barrel

DATA RELEASES TODAY:

AUD – CPI q/q at 11.30am