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AUD/NZD fluctuates within a 23-pip range due to less-than-anticipated Australian inflation
The AUD/NZD exchange rate has fluctuated wildly as Australian inflation has declined significantly. The Australian inflation rate has decreased to 6.9%, whereas the consensus estimate was for an increase to 7.3%. This week, the Caixin Manufacturing PMI, which is expected to fall to 48.9, is of the utmost importance.
During the Asian session, the AUD/NZD pair fluctuated wildly within a band of 1.0764-1.0787 after the Australian Bureau of Statistics released lower-than-expected Australian inflation statistics. The Consumer Price Index (CPI) for October revealed a reduction in the inflation rate to 6.9%, whereas market participants had anticipated an increase to 7.4%.
Policymakers at the Reserve Bank of Australia (RBA) will likely breathe a sigh of relief if inflation falls. The Australian central bank was particularly concerned since inflationary pressures had previously shown no signs of abating. The market anticipated that RBA Governor Philip Lowe will be compelled to return to a rate hike structure of 50 basis points (bps) in order to rein in inflation.
As the inflation rate has dropped below 7.0%, the RBA may maintain its current rate hike schedule of 25 basis points to maintain economic prospects and fulfill its mandate to achieve price stability.
Meanwhile, investors are monitoring the progress of the Chinese protests. The economic forecasts have become more pessimistic as a result of the public's angry and frustrated lockdown protest against Covid. This has held the antipodeans in the grip of bears this week.
Apart from that, Thursday’s Caixin Manufacturing PMI data will remain key. The economic data is anticipated to be lower at 48.9 than the previous reading of 49.2.
On the New Zealand front, the number of Building Permits has declined by 10.7%, compared to the predicted 2.4% expansion and the previous release of 3.6%. Accelerating interest rates by the Reserve Bank of New Zealand (RBNZ) can be accountable for a reduction in the economic catalyst.
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