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Australian bonds suffer on hopes of rise in Q3 CPI; September retail sales in focus

Australian government bonds suffered during Asian session Tuesday as investors expect to see a slight rise in the country’s consumer price inflation (CPI) data for the third quarter of this year, scheduled to be released on October 31 by 00:30GMT.

The CPI index is seen rising to 0.5 percent q/q, from 0.4 percent q/q in the previous quarter. However, on a y/y basis, it is seen to register 1.9 percent, from prior 2.1 percent.

Further, Australia’s retail sales for the month of September, due for release by end of this week, will add further direction in the debt market.

The yield on Australia’s benchmark 10-year note, which moves inversely to its price, rose 1-1/2 basis points to 2.585 percent, the yield on the long-term 30-year bond remained tad higher at 3.079 percent and the yield on short-term 2-year traded nearly flat at 1.976 percent by 03:25GMT.

After last week’s sharp fall, Australia’s ANZ-Roy Morgan consumer confidence recovered by 2 percent, regaining a third of last week’s decline. Four of the five sub-indices were positive. Households’ perceptions of current financial conditions rose by 3.1 percent last week, while sentiment regarding the future financial situation rose by 1.5 percent.

Further, Australian building approvals rose 3.3 percent m/m in September, following a revised 8.1 percent decline in August (originally printed as -9.4 percent m/m). Total residential approvals are now 14.1 percent lower than a year ago, with both houses (-7.1 percent y/y) and apartments (-21.4 percent) suffering.

Meanwhile, the S&P/ASX 200 index traded 1.65 percent higher at 5,749.5 by 03:50GMT, while at 03:00GMT, the FxWirePro's Hourly AUD Strength Index remained neutral at 62.66 (a reading above +75 indicates a bullish trend, while that below -75 a bearish trend). For more details, visit http://www.fxwirepro.com/currencyindex

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