It was a sparse schedule of economic data releases today:
- Australia headline CPI +0.2% Q/Q (vs. +0.4% expected), lowest in 3 quarters
- Australia Trimmed Mean CPI +0.6% Q/Q (vs. +0.7% expected)
- Australia Weighted Median CPI +0.5% Q/Q (vs. +0.6% expected)
- Australia Wespac/MI Leading Index +0.6% M/M (vs. +0.07% prior)
- The December Conference Board Leading Economic Index for China increased 0.4 percent to 251.1 (November was + 1.1% and October was +1.6%)
- Australian Treasurer Swan: Inflation well contained and has given the RBA room to cut rates
- Abe: Japan to correct excessively strong Yen
- Market chatter of Toshin USD/JPY buying below 88.40
It was a quiet day across the board; with some USD/JPY and AUD/USD activity the only bright spots.
USD/JPY traded a very narrow range for it of late, 88.38 to 88.78. There is talk of good size buying interest below 88.40 (see link in bullets, above), but it is unconfirmed market chatter at this stage.
The AUD weakened on the CPI data. The data showed benign levels of inflation and spurred some talk of a potential February rate cut from the RBA. The market has a probability of this happening in the 34-39% range; given recent RBA comments and rate cut, it seems quite unlikely.
Other currencies were very quiet indeed.
