AUD

AUD Surges After CPI Comes In Just a Bit Faster Than Forecast

Australian dollar is surging against the USD, in the aftermath of a slightly stronger than expected CPI report.

According to the Australian Bureau of statistics, headline CPI was up 0.5% quarter-over-quarter, just faster than expectations for a 0.4% increase and slower than Q3’s 1.0% pickup.

Meanwhile, annual CPI advanced by 2.1%, just above calls for a 2.0% increase and prior 1.3% gain.

Details of the report were relatively in line, with the RBA’s trimmed mean CPI up 0.6% on the quarter, slower than Q3’s 0.8% pickup, and the weighted median up 0.7%, slower than the prior 0.8% rise.

The results in theory add credence to the view that the Reserve Bank of Australia will hike interest rates at next week’s interest rate decision, a development which most economists expect.

Nevertheless, after a weaker than expected PPI report released on Monday, market participants had only priced in a 67% chance of the hike occurring.

As a consequence, in the minutes following the announcement AUD/USD surged 26 pips to an intraday high of 0.9031. Support lies at 89.30 with resistance at 91.88 and 92.05.