From the FXWW Chatroom: AUD(From Susanne Galler): Still need to read the full content but listening to Debelle three things are clear: a. the market misinterpreted the Mins b. Australia is not Canada and c. RBA isn’t happy with the AUD move. As mentioned yesterday … a 5% move in the AUD TWI has about the same econ effect as a 25bp hike and the RBA does not sound like this is their intention. We felt the risk was to the downside in AUD over today’s speech which materialized. AUDUSD is a bit sticky around 0.7880ish now with some good demand on the toy around that zone when we initially tested it. Whilst it is a bit discouraging that AUD couldn’t have another leg lower on the numerous currency focused comments by Debelle, I remain bearish and wouldn’t be surprised if we test key support into 0.7835 (previous break-out level) later today, around where I would turn neutral again. We now had two RBA speakers trying to cool down tightening expectations (Harper earlier) and this makes it unlikely that Lowe will contradict this message next week. To make the ride a bit rockier though I wary of a tad better inflation print than expectations, at least for the headline reading. The MI Inflation Gauge which tends to be a decent leading indicator for headline CPI points at 2.5% yoy (market expectations are for 2.2%). Just something to be wary of and something that will make me more tactical in AUD mid next week (CPI is due 1 ½ hours before Lowe speech on Wed.
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