More headaches for RBA as Aussie dollar can head higher

Card has overtaken cash as the most frequent consumer payment method for the first time

The CPI rose 1.9 per cent through the year to June quarter 2017 having increased to 2.1 per cent in the March quarter 2017. The Fed's previous statement said inflation was running "somewhat below" target.

"Just as we did not move in lockstep with other central banks when the monetary stimulus was being delivered, we don't need to move in lockstep as some of this stimulus is removed", he said.

What do retail traders' buy/sell decisions hint about the Australian Dollar trend?Find out here. We are seeking to do this in a way that supports sustainable growth in the economy and that best serves the public interest.

If the USA dollar continues to be out of favour it means the Australian dollar can keep heading higher.

"A stabilising terms of trade has made the RBA less nervous about the exchange rate, but headwinds to goods inflation and GDP growth from the TWI are nevertheless building", says Jarman.

Forex traders will also keep an eye on this Friday's initial reading on the pace of growth in the United States economy for the three months to June.

Such tepid figures combined with Lowe's comments may well put to rest speculation over domestic interest rate hikes which flared up after the Bank of Canada increased its policy rate to 0.75% this month. The New Zealand dollar fell to 74.24 USA cents versus 74.38 late yesterday.

Then there is Australia's own inflation report slated to be released on Wednesday.

According to Lowe, "insidious" slow wage growth is now a challenge for the central bank and means Australia will struggle to meet the bank's inflation target.

But a higher reading will have more impact. "Inflationary pressure is mainly coming from government influenced areas like utilities which are up 4.5 per cent year on year, health which is up 3.8 per cent year on year and education which is up 3.3 per cent year on year". That saw many in the markets completely misread what the RBA was saying - that it was softening up markets for the start of a stream of rate rises to "normalise" monetary policy.

The Australian sharemarket followed global stocks higher but the Australian dollar fell after consumer inflation came in well below forecasts.

Finally, those commodity prices and China's growth rate are both tipped to soften in 2018.

Officials at the USA central bank voted unanimously to leave interest rates unchanged and signaled that the central bank could start shrinking its balance sheet "relatively soon".

Ah July, also known as that month where all your friends are overseas having fun and you're not.

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