AUD/NZD gyrates in a 23-pips range on lower-than-projected Australian Inflation

• AUD/NZD has shown a wild swing as Australian inflation has delivered a meaningful decline.
• The Australian inflation has dropped to 6.9% while the street was expecting an increment to 7.3%.
• This week, Caixin Manufacturing PMI is of utmost importance, which is seen lower at 48.9.

The AUD/NZD pair has displayed a wild swing in a 1.0764-1.0787 range in the Asian session as the Australian Bureau of Statistics has reported lower-than-projected Australian inflation data. October’s Consumer Price Index (CPI) report has shown a decline in the inflation rate to 6.9% while market participants were expecting an increment in the inflation rate to 7.4%.

A decline in inflation is expected to provide a sigh of relief to Reserve Bank of Australia (RBA) policymakers. The Australian central bank was extremely worried as inflationary pressures were not showing any sign of exhaustion earlier. The street was expecting that RBA Governor Philip Lowe would be forced to return to 50 basis points (bps) rate hike structure to curtain galloping inflation.

As the inflation rate has slowed down below 7.0%, the RBA might continue its current rate hike pace of 25 bps to keep economic prospects alive alongwith the mission of bringing price stability.

Meanwhile, investors are keeping an eye on development over public protests in China. Anti-Covid lockdown protest by the general public in a state of anger and frustration has resulted in weaker economic projections. This has kept the antipodeans in the grip of bears this week.

Apart from that, Thursday’s Caixin Manufacturing PMI data will remain crucial. The economic data is seen lower at 48.9 than the prior release of 49.2.

On the New Zealand front, the number of Building Permits has shown a negative growth of 10.7% vs. expansion of 2.4% as expected and the prior release of 3.6%. Accelerating interest rates by the Reserve Bank of New Zealand (RBNZ) might be responsible for a decline in the economic catalyst.