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AUD/USD recaptures 0.80 on solid Australian inflation

Australia reported a rise of 0.2% in the consumer price in index for Q4. While this was slightly  below expectations of 0.3%, the Trimmed Mean CPI (known as core CPI elsewhere advanced by 0.7%, more than 0.5% expected. Year over year, headline inflation rose 1.7% and core inflation by a nice 2.2%.

These figures lower the chances of an RBA rate cut next week and the Aussie reacted.

AUD/USD jumped from the low of around 0.79 to a first attempt on 0.80. After a struggle, a second, steady move followed and the pair reached a peak of 0.8023.

Is the Aussie set to sit above 0.80 and  escape the fate of its peer commodity currencies?

In New Zealand, inflation dropped in Q4 and the kiwi was hit hard. In Canada, the central bank shocked with a rate cut after over 4 years without changing the rates. All this exerted  pressure on the A$, but apparently things are better in Australia.

The  Reserve Bank of Australia meets on Tuesday, February 3rd and a change in the 2.50% interest rate now seems unlikely: a solid 2.2% yearly advance in core CPI is something many developed economies dream of.

For more, here is the Aussie forecast.

Here is how the surge looks on the chart:

Australian dollar above 80 cents again January 28 2015 after strong Australian inflation

Yohay Elam

Yohay Elam

Yohay Elam: Founder, Writer and Editor I have been into forex trading for over 5 years, and I share the experience that I have and the knowledge that I've accumulated. After taking a short course about forex. Like many forex traders, I've earned a significant share of my knowledge the hard way. Macroeconomics, the impact of news on the ever-moving currency markets and trading psychology have always fascinated me. Before founding Forex Crunch, I've worked as a programmer in various hi-tech companies. I have a B. Sc. in Computer Science from Ben Gurion University. Given this background, forex software has a relatively bigger share in the posts.