Early this morning the CPI (consumer price index) inflation report was released from Australia, which was a mixed one, as some numbers jumped higher, while others cooled off. Inflation cooled off in Q2, but increased on an annualized basis.  The headline CPI rate dipped a little QoQ but was higher YoY compared with Q1. Core inflation rates inched a little higher QoQ and also higher YoY compared with Q1.

The fears in the market were for a rise above expectations, which we did not get. From this data it appears very likely now the RBA will hike by 50bp next week, the meeting which is on August 2.

Australian Q2 CPI Inflation Report

• Q2 CPI QoQ 1.8% vs 1.8% expected
• Q1 CPI QoQ was 2.2%
• CPI YoY 6.1% vs 6.2% expected
• Prior CPI YoY was 5.1%

Core inflation indicators

• Trimmed mean CPI QoQ 1.5% vs 1.5% expected
• Prior trimmed-mean CPI QoQ was 1.4%
• CPI YoY 4.9% YoY vs 4.7% expected
• Prior trimmed mean CPI YoY was 3.7%
• Weighted median CPI QoQ 1.4% vs 1.4% expected
• Prior weighed median CPI QoQ was 1.0%
• Weighed median CPI YoY 4.2% vs 4.3% expected
• Prior weighed medianCPI YoY was 3.2%

These results look to have locked in a 50bp rate hike at the Reserve Bank of Australia meeting on Tuesday next week, August 2 (statement due at 0430 GMT). The next official CPI data for Australia is not due now until October (for Q3), although we will get monthly unofficial data each month.

AUD/USD Daily Chart – MAs Hold As Support