Upbeat data of China’s inflation released during early Wednesday did not support the Aussie. China’s Consumer Price Index (CPI) was same as previous month maintained at 0.6% while rising-0.2% YoY versus -0.6 % expected. Adding to it, the Producer Price Index (PPI) followed the suit with a record of 1.7% versus 0.7% forecast.
It should also be noted that Australia’s Westpac Consumer Confidence grew past-1.8% forecast and 1.9% prior readings to flash 2.6% but even this data failed to support the Aussie.
Australia’s A$2 trillion ($1.5 trillion) economy expanded by a larger-than-expected 3.1% in the December quarter, clocking its fastest ever back-to-back quarterly rises. Job growth has been sturdy while retail sales are going strong too.
“These better-than-expected outcomes are very welcome news,” the Reserve Bank of Australia’s (RBA) governor, Philip Lowe, said in a speech in Sydney.
“However, they do not negate the fact that there is still a long way to go and that the Australian economy is operating well short of full capacity.”
The remarks come as financial markets begin pricing in rate hikes on the back of strong economic data and optimism about successful coronavirus vaccine rollouts. Lowe noted the recent surge in Australian bond yields that were boosted by expectations of possible increases in the cash rate as early as late next year, saying, “This is not an expectation that we share.”
Even so the policymaker said, “The economy was now within a striking distance of its pre-pandemic output.”
On the other hand, In the view of the analysts at Morgan Stanley, the US economic growth is likely to return to the pre-coronavirus pandemic level by the end of this month.
Market sentiment turns slow after the previous day’s optimism surrounding America’s $1.9 trillion relief bill. The same seems to have favored the US dollar to consolidate recent losses while also restricting the US 10-year Treasury yields around 1.53%.
AUD/USD 4 Hour Chart:
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