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Aussie Inflation Falls Again
The Australian Dollar is looking a little softer across the European morning on Wednesday following the latest domestic data overnight. Australian CPI was seen falling back to 0.6% QoQ, down by half from the prior quarter’s 1.2% figure. On the year, inflation stood at 3.4%, down sharply from the prior 4.3% reading and below the 3.7% the market was looking for.
RBA Rate Cuts Coming
The data has added to the view that the RBA will refrain from further tightening with focus now shifting towards gauging the first likely rate cut. This marks the fourth consecutive quarter of slowing inflation and has seen traders pulling their RBA rate-cut projections closer with June now the expected date for an initial cut from the bank. While the bank is not expected to cut at next week’s meeting, traders will be looking for a more dovish message from the bank acknowledging the progress on taming inflation along with a signal that rate cuts are coming.
Fed Up Next
Looking ahead today, the Fed could add to the Aussie’s woes if we hear a more hawkish tone from the bank. Data has continued to surprise to the upside recently. Diluting the need for any near-term rate cuts. If we hear further pushback from the Fed this should keep USD supported near term, creating divergence between the market’s Fed/RBA expectations, leading AUDUSD lower.
Technical Views
AUDUSD
The sell off from the .6857 level has stalled for now into a retest of the broken bear trend line and the .6520 support level. With momentum studies bearish, however, risks of a downside break are growing. Below current support .6275 is the next target for bears. To the topside, bulls need to clear .6681 to alleviate bearish pressure.
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With 10 years of experience as a private trader and professional market analyst under his belt, James has carved out an impressive industry reputation. Able to both dissect and explain the key fundamental developments in the market, he communicates their importance and relevance in a succinct and straight forward manner.