Aussie Drops After PPI, Looks to CPI

Australia’s disappointment in producer prices triggered a sell-off in both the Australian and New Zealand dollar. The strength of the Australian dollar has reduced inflationary pressures which will relieve some of the central bank’s urgency to raise rates.

Consumer prices are due for release tonight and if that surprises to the downside as well, the near term top in the AUD/USD could be cementer. The disappointment could also prompt speculation that the Reserve Bank of New Zealand will be less hawkish Wednesday night after their rate decision. The Canadian dollar on the other hand continues to strengthen as oil prices gap higher in Monday trading. Expect leading indicators to come out strongly tomorrow, but this will not result in any rate changes by the central bank.