For a benign inflation report the Aussie dollar’s reaction is remarkable.
With a rise of just 0.5% in the June quarter taking the headline CPI rate to the 3% the market expected it would be easy to expect no movement.
Currency traders however have focused on the higher than expected 0.8% rise in the trimmed mean even though it is sitting at 2.9% year-on-year.
The inflation report won’t impact the RBA or the outlook for interest rate stability. But for forex traders? They are clearly sick of being short the Aussie dollar and watching it bounce back strongly from every setback and are short covering.