The data is here

In a nutshell, the q/q core inflation was higher than expected, but the y/y is still very low.

More:

  • The RBA meet next on August 2
  • Market pricing for a cut was around 70% prior to the inflation data
  • Its now around 50%

Details of the data today show inflation is still very weak.

  • Food inflation was expected to be higher, for example, but surprised lower - fierce retail competition cited
  • A lower AUD say clothing and footwear (imports) with slightly higher prices
  • Housing component of the data weak (new home prices up, but rents down
  • 'Non tradeables' inflation is weak (1.6% y/y, its 3rd quarterly fall in a row).

The 50/50 pricing for the next RBA meeting is about right - its going to be very close. On balance I reckon a cut is still the most likely outcome, but very close.

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For the AUD ... given the upmove we have had over the past 24 odd hours or so it looks like it can head lower from here (ie. a lot of shorts taken out, downside vulnerable)

The FOMC coming up in US time complicates things ... over to Janet and friends now.