The Aussie pair dropped sharply after the moderately strong US inflation data. The data showed that the country’s headline inflation increased to the highest level in more than 30 years. The headline Consumer Price Index rose to 6.2%, which was higher than the average estimate of 5.8%.
The core inflation increased to 4.6%, which was considerably higher than the previous jump of 4.2%. The two numbers also increased consistently on a month to month basis. Consequently, these numbers are a signal that the Fed will probably accelerate the pace of asset purchases and it will also likely increase interest rates earlier than expected. Australia is also seeing high inflation especially in home prices in most cities and even rural areas have risen to record highs.
In the meantime, the AUDUSD pair also dropped because of the weak Australian jobs data as according to the Australian Bureau of Statistics, the country lost more than 46k jobs in October. This was in addition to the 138k jobs that the country lost in September whereas analysts were expecting the data to show that the economy added 50k jobs. The country’s unemployment rate jumped from 4.6% to 5.2%. These numbers signal that the country’s economy is recovering at a relatively slower pace than expected. Still, there is a possibility that the situation will stabilize in the coming months.
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