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Australian government bonds gained on Wednesday after lower-than-expected Q2 headline consumer inflation data erased market expectations of the Reserve bank of Australia (RBA) near-term interest rate hike hopes.
The yield on Australia’s benchmark 10-year Note, which moves inversely to its price, fell 3 basis points to 2.691 percent, the yield on the long-term 30-year Note dipped 3-1/2 basis points to 3.166 percent and the yield on short-term 2-year down 2 basis points to 2.054 percent by 03:30 GMT.
According to the latest Australian Bureau of Statistics (ABS) figures, the Consumer Price Index (CPI) rose 0.4 percent in the June quarter 2018, lower than the market expectations of 0.5 percent increase. This follows a rise of 0.4 percent in the March quarter 2018. The CPI rose 2.1 percent through the year to June quarter 2018, having increased 1.9 percent through the year to March quarter 2018.
"Annual CPI growth is 2.1 percent in the June quarter 2018, the second annual rise above 2.0 percent since September quarter 2014. Most of this annual growth is due to strength in fuel, electricity and tobacco. Annual growth in prices of discretionary goods such as clothing and footwear, and furniture and household equipment remain subdued,” said Bruce Hockman, Chief Economist at the ABS in the press release.
It is worth noting that the RBA's next meeting is scheduled for August 7, where the board members are expected to keep its interest rate unchanged at 1.50 percent.
In the United States, Treasuries remained moved higher as investors moved to risk haven assets. The U.S. 10-year Treasury yield declined over 1-1/2 basis points to 2.937 percent. Markets would now mainly focus on the Q2 GDP growth scheduled to be released on Friday.
Meanwhile, the S&P/ASX 200 index traded 0.33 percent lower at 6,197.5 by 03:30 GMT, while at 03:00GMT, the FxWirePro's Hourly AUD Strength Index remained neutral at 0.51 (a reading above +75 indicates a bullish trend, while that below -75 a bearish trend). For more details, visit http://www.fxwirepro.com/currencyindex
