Australia: CPI disappoints - BBH

Australian consumer prices rose 0.2% in Q2, half the pace the economists expected in the Bloomberg survey while the year-over-year pace slipped to 1.9% from 2.1%, notes the analysis team at BBH.  

Key Quotes

“The median expectation was for a small uptick.  Nevertheless, the trimmed mean and weighted median measures were spot on with a 0.5% increase.  Shortly afterward, RBA Governor Lowe underscored the official argument that because the central bank did not ease as much as many other central banks, it needn't follow them so closely in removing the accommodation.  He argued that keeping rates low is helping the economy adjust and underpinning the labor market.  Lowe also noted that it would be better if the currency were lower.” 

“The Australian dollar approached $0.8000 on July 20 and backed off to $0.7875 before last weekend.  It rose in the past two sessions but stalled near $0.7970.  Today's setback to just above the $0.7875 low is keeping the consolidative tone intact.  The technical indicators are beginning to deteriorate for the Australian dollar, which warns that the consolidation may morph into an outright correction unless the $0.7920 level can be overcome.  On the downside, the near-term potential exists toward $0.7780-$0.7800.”