Fresh Aussie Inflation Jump
AUDUSD is weaker today though largely as a result of a stronger US Dollar midweek. Overnight, the latest Australian economic data showed a sharp rise in inflation last month. Annualised July CPI surged to 2.8% from 1.9% prior, above the 2.3% the market was looking for. The increase in consumer prices come son the back of the RBA recently cutting rates by a further .25% while signalling that further easing could be appropriate. This data has clouded the outlook now, serving as strong evidence of the ongoing inflationary risks facing the Australian economy.
RBA Expectations
Looking at the breakdown of the data, core inflation was seen rising also hitting 2.7% from 2.1% prior. Prior the data the market had been pricing in a further RBA cut in November. While pricing has cooled somewhat, traders are still looking for the bank to cut over Q4. However, if inflation continues to push higher in coming readings this could see traders scaling back easing expectations, driving a fresh push higher in AUD.
US Data
Looking ahead this week, AUDUSD should remain tied to USD flows as traders await US prelim GDP and weekly jobless claims tomorrow followed by core PCE on Friday. Any fresh data weakness should weigh on USD, solidifying Q3 easing expectations. However, any upside surprises will muddy the picture more, keeping USD supported near-term.
Technical Views
AUDUSD
For now, the Aussie still remain above the key .6395 level following the latest failure at the .6549 resistance. If we see a break lower here, focus will turn to deeper support at the .6152 level next, in line with weakening momentum studies readings. Above .6549, .6677 is the next bull objective and should see fresh momentum buying if price does reverse up to that level.
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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.