Interesting reaction in the AUD to today’s CPI data

The Aussie is leading the majors on the upside this morning following the latest release of monthly CPI data.

Even though the headline printed slightly higher at 3.5 than market’s expectations of 3.4, the bigger story wasn’t on the headline side but on the core measures.

Trimmed CPI YY decelerated to 3.8 from the prior of 4.1, while CPI ex volatile items and travel fell to 3.7 from 4.0.

Yes, CPI is still way too high, but what today’s data is showing us is that disinflation is underway.

Looking at the data the reaction in the AUD seems a bit out of place, and I wouldn’t be surprised to see the strength fade.

This article was written by Arno V Venter at www.forexlive.com.