I don´t know how many of you were awake last night at around 1am GMT, but I was scrolling the web for some new shoes and when I opened my forex platform for a minute and I saw the quick 80 pip surge in the AUD pairs. Right away I knew that the Australian inflation data, which is the only important economic release today, must have been pretty good.
I quickly switched to a forex news website to see the numbers and they beat the expectations by 0.2%, jumping from 0.4% last quarter to 0.7% this time. The core inflation represented by Trimmed Mean CPI (consumer price index), which strips out the most volatile 30% of goods and services, dropped by 0.1%, but a 0.7% quarterly inflation means 2.8% inflation on a yearly basis. I know some central bankers around the globe would kill for this sort of inflation. Hhmmm, very low Japanese inflation springs in mind.
So yes, the main headline number of the Australian inflation report was impressive and the AUD was quick to take note of it, jumping around 80 pips higher. I remember one of the large central banks yesterday (can´t remember which one) issuing a note to its customers asking them to sell AUD/USD with a take profit target at 0.65, which might be reached by year end according to their fundamental analysis.
While that might turn out to be true a couple of months later, I think that the situation has changed recently and we're not in the same environment where we were several months ago when this forex pair declined to these levels.
Anyway, leaving aside the call to sell this forex pair, this is another sign that inflation is picking up in a global scale. We have seen it pick up in the UK, in the US, in Europe, and now we see that the Far East is catching up too. Even Japan, which has endured disinflation and even deflation in the last three decades, showed some signs of life; the price of services purchased by corporations beat the expectations as well.
Well, all these pieces put together make the wider picture of the global economy look a little brighter. Inflation was a big headache until a few months ago globally, but now even Japan can exceed expectations. Great times we live in.