Consumer Inflation Drives AUD/USD Higher
Consumer prices in Australia rose faster than forecast last quarter, eclipsing the central bank’s target range.
Consumer prices rose at an annualized rate of 2.7 percent in the fourth quarter, official data from the Bureau of Statistics showed today. A median estimate of economists polled by Bloomberg called for 2.4 percent. On a quarterly basis, inflation rose 0.8 percent. Trimmed mean inflation, which captures price changes of core items, rose at an annualized rate 2.6 percent in the three months through December. Economists polled by Bloomberg called for an increase of 2.3 percent.
Inflation was driven largely by education (5.6 percent), alcohol and tobacco products (5.4 percent), health (4.4 percent) and housing (4.3 percent), official data showed. Clothing and footwear was the only major category to face annualized deflation. Prices in that bracket fell 1.3 percent annually.
The AUDUSD pair advanced 37 pips to 0.8845. The pair fell short of the 0.8879 resistance after surpassing the 0.8857 barrier. Technical support is ascending at 0.8648, 0.8770 and 0.8792.
Compared to the previous five days, the Aussie is trading more than a half percent lower versus the greenback. The AUDUSD pair tumbled last week after Australian employment data revealed the loss of 31,600 full-time jobs in December.
A separate report issued by Westpac-Melbourne Institute showed Australian consumer confidence fell 1.7 percent in January, a sign retail spending will remain weak.
Australia’s recent economic woes stem from weakening investment in the nation’s mining sector. The Reserve Bank of Australia is attempting to stimulate growth via manufacturing, residential construction and retail trade, especially in the southern and eastern parts of the country.
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