The Australian dollar fell today as inflation missed forecasts and the central bank’s chief made dovish comments. While the currency has rebounded from the day’s lows as of now, currently it is still trading below the opening level.
Australia’s Consumer Price Index rose 0.2% in the June quarter from the previous three months (not seasonally adjusted). It was a slower growth than 0.4% predicted by experts and 0.5% registered in the March quarter.
Philip Lowe, Reserve Bank of Australia Governor, echoed comments from other RBA officials, saying that the tightening bias of other major central banks does not mean that the Australian central bank should automatically follow:
This has no automatic implications for monetary policy in Australia.
He explained that the RBA did not loosen its policy as much as some other central bankÑ, meaning that now it has less pressure to scale back monetary easing:
Just as we did not move in lockstep with other central banks when the monetary stimulus was being delivered, we don’t need to move in lockstep as some of this stimulus is removed.
Overall, it looks like the RBA is going to maintain its neutral stance in the foreseeable future, meaning that the AustraliaÑ dollar cannot get help from interest rate hike expectations.
AUD/USD traded at 0.7931 as of 13:12 GMT today after opening at 0.7936 and falling to the daily low of 0.7877. EUR/AUD opened at 1.4671, rallied to the session high of 1.4763, and backed off to 1.4715 later. AUD/JPY traded at about 88.44 following the drop from 88.79 to 88.17.
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