Dollar drops after inflation result

(Australian Associated Press)


The Australian dollar is weaker after the release of figures that showed inflation is running at its lowest annual rate since 1999.

The local currency was trading at 75.00 US cents at 1234 AEST, down from 75.16 US cents on Tuesday.

The Australian dollar was at 75.07 US cents prior to the release of June quarter inflation numbers at 1130 AEST, and briefly rose to a high of 75.61 US cents.

But the spike was short lived, and the local currency fell back to just under 75 US cents less than an hour later.

The consumer price index rose 0.4 per cent in the June quarter, missing market expectations of a 0.5 per cent rise, and the annual rate of inflation of 1.0 per cent is the weakest annual rise since 1999.

Economists said the low annual rate meant a cut to the Reserve Bank’s cash rate was still on the cards when bank’s board meets next Tuesday.


One Australian dollar buys:

* 75.00 US cents, from 75.16 cents on Tuesday

* 78.89 Japanese yen, from 78.42 yen

* 68.23 euro cents, from 68.28 euro cents

* 106.73 New Zealand cents, from 106.82 NZ cents

* 57.18 British pence, from 57.46 pence

Government bond yields:

* CGS 5.25pct March 2019, 1.548 pct, from 1.5076 pct on Tuesday

* CGS 4.25pct April 2026, 1.9545 pct, from 1.9196 pct

Sydney Futures Exchange prices:

* September 2016 10-year bond futures contract was at 98.03 (implying a yield 1.97 per cent), down from 98.055 (1.945 per cent) on Thursday

* September 2016 3-year bond futures contract, at 98.6 (1.4 per cent), up from 98.55 (1.45 per cent)

(*Currency closes taken at 1700 AEST previous local session, bond market closes taken at 1630 AEST previous local session)

Source: IRESS



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