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CPI Cools, But Less Than Forecast
The Aussie Dollar is back in the spotlight today following the latest Australian CPI data overnight. Consumer inflation was seen cooling to 3.5% last month, down from 3.8% prior though a touch above the 3.4% the market was looking for. While a move in the right direction, the data shows that CPI is still well above the bank’s target and keeps the near-term rates outlook in question.
RBA Expectations
Last time around the RBA was seen keeping rates on hold while detailing that it had discussed the potential to hike again, given persistent stickiness in inflation. While other central banks have been easing or moving toward easing, the RBA has been grappling with elevated inflation and a strong jobs market which has so far stopped the bank from being able to ease. At the latest meeting, the bank warned that it stands ready to tighten again if needed and will continue to monitor incoming inflation readings.
RBA Easing Expectations
On the back of this latest inflation data, traders have since scaled back their easing forecast. November had previously been pegged as the time by which the bank might start cooling rates, however that has since moved to December. The risk is that if inflation holds around current levels or moves higher, easing forecasts will be pushed into early next year, particularly given the RBA’s hawkish warnings. With this in mind, AUDUSD looks likely to remain supported near-term.
Technical Views
AUDUSD
Looking at the Aussie on the weekly scale, we can see the market has advanced sharply in recent weeks and is now testing the July highs, just ahead of the .6857 level. This is a key resistance area for the pair and a break higher here will open the way for a test of .6994 next. To the downside, .6681 remains key support to watch.
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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.