Following on from yesterday’s post CPI slide, the Aussie dollar continued a slow downward trajectory overnight falling to lows of 89 US cents however remaining fairly buoyant considering the less than convincing feedback from the States. Yesterday Consumer Price Index showed the chances of an election month interest rate hike substantially decreased with inflationary pressures moderating in the second quarter. CPI rose 0.6 percent in the Q2 against estimates of 1.0 percent growth. In annual terms consumer prices increased to 3.1 percent against the expected 3.4 percent. The telling point here was the underlying rate of inflation which has increased 0.5 percent to reflect a yearly rate of 2.7. Given the RBA's target for inflation between 2-3 percent, yesterday’s CPI suggest the RBA will sit on their hands when the bank reconvenes next Tuesday. This morning we are seeing signs the Aussie is regaining composure with the local unit paring loses against major counterparts. At the time of writing the Aussie is buying 89.35 US cents.
Currency activity across the board was fairly subdued overnight considering the turnaround in investor sentiment which saw the S&P 500 lose 0.7 percent on the day. Less than convincing economic data was in focus with US Durable goods orders recording a surprise drop of 1.0 percent in June against the expected 1.0 percent rise. After a slew of positive earnings, DOW component Boeing released Q2 earnings which came in below expectations, raising fresh concerns we may be in for more earnings negativity. We also saw The Fed’s Beige book which is the views of analyst, market experts and economist in 12 Federal Reserve districts show economic activity is improving in 10 of the 12 districts, albeit at a slower pace.
