THE TAKEAWAY: Consumer inflation expectations in Australia fall to 1.8 percent, lowest since November 1997 > Aussie little changed after moderate rally on Fed stimulus plans
The Australian Dollar was little moved as the Melbourne Institute reported consumer inflation expectations fell to the lowest reading since November 1997 at 1.8 percent in December. Declining price expectations may prompt consumers to hold-off on purchases which can be damaging to economic growth potentially resulting in headline inflation figures to fall below the Reserve Bank of Australia’s 2 to 3 percent inflation target range. Policy officials have recently responded to the prospect of potential slowing by reducing interest rates to 3.00 percent this month in an attempt fuel credit markets and ultimately provide an additional spark to economic activity.
Forex Traders bid the high yielding currency during the U.S. session Wednesday as the Federal Reserve introduced additional stimulus measures, yet the AUD/USD was unable to close above a key descending trendline of resistance established around the 1.0582 area.
AUD/USD, Weekly Chart
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- Melbourne Institute