AUD weakest of the majors after a disappointing CPI report - BBH

Analysts at BBH note that the Australian dollar is the weakest of the majors, being the only one lower against the dollar after a disappointing CPI report.

Key Quotes

“To frame the issue, recall that the Australian dollar fell in each of the last three months of 2016, and four of the last five months.  However, this month has been a different story.  It is the strongest of the majors, gaining around 5% coming into today's session.”

“The Q4 CPI miss was not major, but it has spurred talk that the central bank could cut rates again, with some thinking as early as next month.  Consumer prices in Q4 rose 0.5% instead of 0.7% as it did in Q3 and as the median forecast in the Bloomberg survey had expected.  The year-over-year pace was 1.5% (up from 1.3%), just off the 1.6% anticipated.  The trimmed mean and weighted median were also 0.1 percentage points less than expected.  While the RBA cannot be pleased with the sharpness of the Australian dollar's appreciation, we are not convinced that the miss on Q4 CPI is sufficient to push the central bank into another rate cut.”