The Aussie Dollar Plummets
The Aussie bulls are running for cover as the national CPI has missed the mark badly. The headline rose 0.6%QoQ versus 0.8% expected. The with the trim mean at 0.4%QoQ versus 0.5% both prior and consensus. Unrounded, the core came in at 0.37%, which is below the target band.
Implication along the AUD interest rate curve is significant as whatever glimmer of hope the RBA hawks had riding on the CPI print has quickly evaporated in a sea of red.
With the possible move to a more hawkish Fed policy still in play, the Aussie dollar bulls should remain sidelined. After the initial gap lower to .7745 an extension lower is in-game as the USD bulls clamour for downside AUD exposure.
And given the build-up of Long Aud versus its commonwealth peers AUDNZD and AUDCAD we should expect more AUD bloodletting as these positions head for the exits
The London open will be closely monitored as a test of .7700 looks more likely than not
