Australia dollar underwhelmed by inflation
The Australian dollar has faltered after data showed inflation remained stubbornly low last quarter despite relatively brisk economic growth, cementing the case against a rise in interest rates for months to come.
The Australian dollar drifted back to 74.05 US cents in the wake of the figures, after briefly touching 74.50.
It had already faced stiff chart resistance around 74.40 to 74.50, as well as the top for July at 74.84.
Support now comes in at 73.60 and recent lows in the 73.11 to 73.18 zone.
Australia's headline consumer price index rose a slim 0.4 per cent in the second quarter, just under forecasts, and much of that was due to higher petrol prices.
Annual CPI inflation ticked up a touch to 2.1 per cent but underlying measures favoured by the Reserve Bank of Australia stayed at 1.9 per cent, marking 10 quarters below the central bank's target band of two to three per cent.
The subdued result led investors to ratchet back the already small chance of a hike in rates over the next 12 months.
Futures for July next year, for instance, imply a 36 per cent probability of a move by then.
"We believe the RBA will continue with the methodology that the next move in the cash rate is more likely to be up than down. But there is no case for any near-term adjustment," said CBA chief economist Michael Blythe.
"The RBA is unlikely to deliver on its conditional tightening bias before Q1 2019 at the earliest."
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