The Australian dollar’s fate remains in the hands of the US dollar after local inflation figures failed to inspire the currency.
At 1200 AEDT on Wednesday, the local currency was trading at 87.76 US cents, down from 88.18 cents on Tuesday.
The Australian dollar was knocked from its perch above 88 US cents overnight on the back of greenback strength.
The move was disappointing, given the Australian dollar should have been supported by encouraging Chinese data on Tuesday and an improvement in global equities, Westpac senior currency strategist Sean Callow said.
He said inflation figures from the Australian Bureau of Statistics on Wednesday, which were largely in line with market expectations, failed to have a lasting impact on the Aussie dollar.
“We fell as far as 87.46 US cents and then came back up again,” Mr Callow said.
The price of Australian consumer goods and services rose 0.5 per cent in the September quarter.
The consumer price index (CPI), a key measure of inflation, rose 2.3 per cent in the year to September.
The headline CPI was expected to rise by 0.4 per cent in the December quarter for an annual rate of 2.2 per cent, according to an AAP survey of 13 economists.
The ABS said seasonally adjusted CPI rose 0.1 per cent in the September quarter, and was up 2.2 per cent in the 12 months to September.
The ABS calculates the trimmed mean and weighted median measures on behalf of the Reserve Bank of Australia, which uses them to gauge the underlying trend in inflation.
The trimmed mean CPI rose 0.4 per cent in the September quarter, for an annual growth rate of 2.5 per cent.
The weighted median CPI rose 0.6 per cent in the September quarter, for an annual rise of 2.6 per cent.
The RBA has a target range for annual inflation of two to three per cent, and the latest figures could influence the central bank’s interest rate decisions in the coming year.
