Watch out for Australian CPI data due at 02:30 BST | 9:30 p.m. ET

Australian CPI data for May is due at 02:30 BST.

For this week’s CPI release, some participants expect the MM measure of headline inflation to show a stable price reading, thanks to seasonal discounts on vacation spending and clothing, as well as to a drop in retail gasoline prices. However, the YY measure is expected to increase from 3.6% to 3.8%. This would be the highest YY reading since November 2023.

The Reserve Bank of Australia (RBA) kept interest rates steady at its meeting last week, but there were discussions about possible rate hikes due to ongoing inflation concerns . Although the AUD strengthened overall following these comments, they were in line with similar comments made at the May meeting.

The only difference is that Governor Bullock said the possibility of a rate cut was not discussed at last week’s meeting, but it’s not like the markets were expecting that. ‘They are discussing a reduction anyway.

But the way the AUD has moved over the past week suggests markets have only been paying attention to the hawkish elements of the commentary. Which likely means that any reading near 4.0% in CPI this week could shake up markets a bit and see expectations rise for a possible hike, perhaps at the next August or September meeting .

RBA rate expectations

Money markets are currently pricing in an 89% chance that the August meeting will go ahead.


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