AUSTRALIA DATA: August CPI Headline Up To 3%Y/Y, Trimmed Mean Eases To 2.6%
The headline August CPI print was 3.0%y/y, against a 2.9% market consensus and 2.8% July outcome. The trimmed mean was 2.6% y/y, after printing 2.7% in July (there is no consensus estimate for this outcome).
- The chart below plots the CPI monthly y/y trends, including the ABS's ex volatile items and holiday travel measure. We are comfortably up from earlier 2025 lows, even for the trimmed mean (though it ticked down from July levels).
- The ABS notes, "The largest contributors to annual inflation were Housing (+4.5 per cent), Food and non-alcoholic beverages (+3.0 per cent), and Alcohol and tobacco (+6.0 per cent)."
- 4 out of the 11 sub categories have a y/y pace under 2.0%. Transportation is the weakest at 0.4%y/y, but August saw the first rise in 7 months.
Recreation prices shifted down to 1%y/y from 2.6% in July. - The ABS added: "Annual Housing inflation was 4.5 per cent to August, up from 3.6 per cent to July, reflecting increases in Electricity costs. Electricity costs rose 24.6 per cent in the 12 months to August. In monthly terms, electricity costs fell 6.3 per cent in August 2025. The fall in costs this month was driven by NSW and ACT, with households in those States receiving their first payments of the extended Commonwealth Energy Bill Relief Fund (EBRF) rebates."
- Whilst the RBA will continue to place more weight on the quarterly CPI (we get the new comprehensive monthly series towards the end of Nov, for the Oct reference period), today's data will reinforce some caution for the central bank around further easing. It is likely to firm the no change stance next week (although market pricing has priced in very little chance of a move).
- The Q3 CPI print is out on Oct 29, with the RBA outcome on Nov 4. The central bank is forecasting trimmed mean at 2.6%y/y by year end. Any meaningful upside threat to that may trim easing prospects (either ahead of year end or for 2026).
Fig 1: Australia Monthly CPI Y/Y Trends, Up From Recent Lows
Source: ABS/MNI
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CHINA PRESS: NDRC To Accelerate New Funding Tool Launch
The National Development and Reform Commission will expedite the establishment of new policy-based financial instruments to fund emerging industries and infrastructure projects, with local governments actively preparing projects, Shanghai Securities News reported. It is estimated that the scale of the new tool will be CNY500 billion, which can leverage CNY1.5-2.5 trillion in infrastructure investment and help lift its growth rate to 6.0% this year from the 3.2% in the first seven months, the newspaper said citing an unnamed expert.
USD: BBDXY - Quickly Back Testing 1200 After Market Interprets Powell Dovish
The BBDXY range Friday night was 1199.66 - 1212.47, Asia is currently trading around 1203. The USD collapsed with US yields as the market interpreted Powell to be surprisingly dovish. ‘Up the stairs and down the elevator’ would be an accurate way to describe price action in the USD with the market being dragged kicking and screaming to reduce its shorts into the event but is very quick to reinstate USD shorts when it perceived very little hawkish push back. A sustained break below 1197/1195 is needed to regain the momentum lower and retest the year's lows. There are some who do not see Powell’s speech to be as dovish, price action over the next couple of days will determine who is right.
- Ben Hunt on X: “Powell explicitly abandoned the idea of *achieving* a 2% inflation rate in this cycle and “reaffirmed” 2% only as a long-term aspirational goal as measured by long-term inflation expectations anchored (whatever that means) at 2%. This is PROFOUNDLY dovish and is ABSOLUTELY a verbal abandonment of the 2% target. For the past 3 years, Powell has said that 2% inflation was not aspirational and not something to get close to, but something to actually achieve. That language is now gone. We will not see 2% in this cycle. This is profoundly dovish.”
- RenMac on X: “This is about September. If you get solid data, you’ll get a hawkish cut in September. If you get bad data, you’ll get a dovish cut. That’s how to think about this. Through the lens of an insurance cut being green lit in September. Importantly, Powell is accepting the Waller framing of the world. We had a shadow chair already. Time to give him the job.”
- Bloomberg - “Dollar to Drop as Fed Cut Bets Defy Inflation Threat: The dollar is poised to take another substantial leg lower as pressure builds on the Federal Reserve to resume interest-rate cuts, despite re-accelerating inflation, setting up a lose-lose scenario for the currency.”
- Data/Events : Building Permits, New Home Sales, Dallas Fed Manf. Activity
Fig 1: BBDXY Daily Chart
Source: MNI - Market News/Bloomberg Finance L.P
LNG: European Gas Finishes Week Higher As Ukraine Peace Looks Elusive
European gas trended lower until mid-August but finished last week up 7.8% after rising 0.9% to EUR 33.47 on Friday. Prices fell to EUR 33.05 before recovering to a high of EUR 33.685. They have found support from stalling progress towards peace in Ukraine which makes the return of Russian gas to Europe an even more distant prospect. Gas is still down around 5% this month.
- Ukraine said that it struck Russia’s Novatek PJSC gas facility on the Baltic Sea. Leningrad governor Drozdenko said that a fire was extinguished and repairs at the plant have begun, according to Bloomberg.
- After talks between Presidents Trump and Putin and Trump, Zelenskyy and other European leaders, Russia stated it needs to agree to security guarantees and appears hesitant about a Putin-Zelenskyy meeting. Trump has again threatened Russia with “massive sanctions or massive tariffs or both” if an agreement isn’t reached in two weeks.
- US natural gas sank 4.7% to $2.692 on Friday to be down 7.7% on the week and 13.3% this month. It has continued falling at the start of the week with Henry Hub currently around $2.65. It is approaching oversold.
- US prices have trended lower recently driven by a mild summer and continued ample supply. Forecasters are now expecting an early end to cooling demand. There could be an extended shoulder season before heating demand begins.
- EBW AnalysticsGroup is expecting cooling degree days to fall by 25 w/w, according to Bloomberg. Temperature forecasts rose for the eastern and western US for the start of September, while they fell for the middle US, according to Atmospheric G2.
- US lower-48 gas output rose 6.6% y/y while demand was up 10.1% y/y on Friday. Flows to LNG export facilities were little changed on the week.
