Currency News: Weak September CPI Causes A fall In The Aussie
Currency News
The Australian dollar is facing a torrid time as of late, as the currency plunged 1% on Wednesday after weaker than expected inflation spurred rumour of a third rate cut this year by the Reserve Bank of Australia.
The Aussie dropped from US71.91¢ to US71.19¢ on publication of the third-quarter consumer price index, which presented headline inflation slowed to 0.5 per cent in the three months to the end of September, from 0.7 per cent in the June quarter.
Moreover, core inflation, which excludes or smooths out extreme price movements, was also below expectations.
“The surprise weakening in underlying CPI inflation in the third quarter in Australia could actually be enough to prompt a rate cut at next Tuesday’s RBA policy meeting,” wrote Capital Economics chief economist for Australia Paul Dales.
“But even if it doesn’t, the data make it more likely that the bank will have to reduce rates to 1.5 per cent next year,” he said.
Although there was some good news for the Australian Dollar, as it recovered slightly after its initial decline, to be fetching US71.35¢ in early afternoon trade.
