The Australian dollar demonstrated a huge jump today immediately after inflation data was released in Australia. The report was in line with market expectations, suggesting that the Australian central bank will keep monetary policy stable, refraining from an interest rate cut.
The Consumer Price Index rose 0.6 percent in the second quarter of 2014 from the first quarter, on a seasonally adjusted basis. The trimmed mean CPI, which demonstrates the underlying inflation trend through component weighting and anomaly exclusion, was up 0.8 percent. Both readings matched forecasts exactly.
Glenn Steven, Reserve Bank of Australia Governor, said this week that he is content with the current monetary policy. While today’s data does not suggest that an interest rate hike is possible, at least it proves that there is no reason to expect more accommodative policy, which would be detrimental to the Aussie’s performance.
The Australian currency was also supported by speculations that a manufacturing report from China, which is released this week, will show faster growth of China’s manufacturing sector.
AUD/USD jumped from 0.9393 to 0.9434, while AUD/JPY advanced from 95.30 to 95.68 as of 2:13 today. GMT EUR/AUD sank from 1.4330 to 1.4269, trading near the lowest rate since November.
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