At 11.30AM Sydney time (0130GMT) we get the quarterly inflation report out of Australia. Quarterly! Nearly every one else does it monthly, but no, not in Australia.

  • The prior result (way back for the last 3 months in 2012) was +0.2% q/q (2.2% y/y)
  • Expected is +0.7% (2.8% y/y)

The RBA pay most attention to the ‘Trimmed Mean’ measure of inflation, which is a measure of ‘core’ inflation:

  • Prior was +0.6% q/q (2.3% y/y)
  • Expected is +0.5% q/q ( 2.4% y/y)

Given the Trimmed Mean is the measure the RBA focus on, the market focus will be on it too. If it comes in at, or close to, expectations it puts inflation comfortably within the RBA’s 2 to 3% target range. If it comes in much higher than expectations though it will switch market focus back to the ‘end of the easing cycle’ and perhaps to ‘when is the next rate hike?’ and AUD should test 1.03.

AUD/USD is currently quietly trading around 1.0263/68. As previously noted, there is selling 1.0270 (which has held the top all morning so far), bids are 1.0200/20. As a precautionary note, take care using levels if the CPI numbers come out away from expectations.