Australia’s quarterly inflation report could have triggered rate cut expectations, but the figures were sound enough to stave off such speculation. Headline inflation inflation came out at 0.4% q/q against 0.3% expected. Also year over year, we had a beat at 1.7%, more than 1.6% predicted.

Also core inflation, known in Australia as trimmed mean CPI beat with 0.6% against 0.5% q/q and y/y it stands on a healthy 2.1%, which is like in the US and within the RBA’s target.

Glenn Stevens and his colleagues at the central bank convene next week after a summer break in January and a cut seems to well off the cards. Internal data looks much better than the reactions of the currency to the news from China. Also employment and other figures look healthy and stable.

On this background, AUD/USD consolidated its position above 0.70.Further resistance awaits at 0.7065, followed by 0.7150. Support awaits at 0.6950 and more importantly at 0.6830.

This doesn’t mean that the pair cannot drift lower on another souring of the mood, but the fundamentals in Australia are stable enough to prevent a massive sell-off.

Later we will hear from the other side of the pair: the Federal Reserve makes its decision. Preview: Fed decision: hard to keep it balanced – 4 scenarios

Here is how the pair looks on the chart.