EN:Australian dollar takes a hit as inflation expectations diminish; RBA has breathing room on rates
The Australian dollar to US dollar exchange rate is 0.678% lower on the day with 1 AUD = 1.0249 USD.
The pound to Australian dollar exchange rate is 0.594% higher with 1 GBP = 1.5405 AUD.
The Australian dollar has been hit by the latest release of inflation figures in Australia.
The seasonal adjusted estimate of the CPI rose 0.9% in Q2 in line with the unadjusted rise of 0.9%, while the annual growth rate
in the seasonally adjusted estimate is just a touch higher at 3.7% yoy, compared with the unadjusted rate of 3.6% yoy.
"For the RBA, the downward revision to published underlying inflation is likely to see the Bank mechanically trim its end-2011 underlying inflation forecast from 3.25% to 3.0% when it releases its next set of forecasts in early November (assuming a quarterly rise of 0.7-0.8% in Q3)," says an exchange rate note from RBS.
RBS say that, more broadly though, the more modest acceleration in inflation in the first half of 2011 (RBS now calculate six-month annualised underlying inflation at 2.9% in the H1 compared with 3.6% previously) is likely to leave the Board feeling more comfortable leaving rates on hold in the near term.
Looking further out, though, the key question will remain that of how softer global growth will work to contain medium term inflation.
