AUDUSD continues to benefit from the return to risk assets

25 Nis

AUSTRALIAN DOLLAR ( AUDUSD ) ANALYSIS
- Australian inflation eases less than anticipated in March and Q1 as a whole
- AUDUSD continues to benefit from the return to risk assets

AUSTRALIAN INFLATION EASES LESS THAN ANTICIPATED IN Q1
Monthly, quarterly and yearly inflation measures showed disappointing progress towards the Reserve Bank of Australia’s (RBA) target. The monthly CPI indicator for May rose to 3.5% versus the prior 3.4% to round off a disappointing quarter where the first three months of the year revealed a rise of 1%, trumping the 0.8% estimate and prior marker of 0.6%.

Generally higher service cost pressures in the first quarter have made a notable contribution to the stubborn inflation data – something the RBA will most likely continue to warn against. The local interest rate is expected to remain higher for longer in part due to the sluggish inflation data but also due to the labour market remaining tight. A strong labour market facilitates spending and consumption, preventing prices from declining at a desired pace.

Markets now foresee no movement on the rate front this year with implied basis point moves all in positive territory for the remainder of the year. This is of course likely to evolve as data comes in but for now, the chances of a rate cut this year appear unlikely.

AUDUSD CONTINUES TO BENEFIT FROM THE RETURN TO RISK ASSETS
After escalation threats between Israel and Iran appeared to die down, markets returned to assets like the S&P 500 and the ‘high beta’ Aussie dollar. AUD/USD subsequently reversed after tagging the 0.6365 level – the September 2022 spike low and surpassed 0.6460 with ease.

Upside momentum appears to have found intra-day resistance at a noteworthy area of confluence resistance – the intersection of the 50 and 200-day simple moving averages (SMAs). The move could also be inspired by reports of Israel preparing to move on Hamas targets in Rafah, which could risks deflating the recent lift in risk sentiment.

US GDP data tomorrow and PCE data on Friday still provide an opportunity for increased volatility and a potential USD comeback should both prints surprise to the upside, further reinforcing the higher for longer narrative that has reemerged. All things considered, AUD may be susceptible to a sifter end to the week.

2 May

Not

The AUD continued to rise on Thursday despite weaker-than-expected data on the trade balance and building permits. The AUD/USD pair is currently up nearly 0.1%, trading around the 0.6532 mark, supported by positive market sentiment following more dovish statements from Fed Chairman Jerome Powell on Wednesday.

The stronger AUD was also driven by speculation that the RBA may delay lowering interest rates in 2024 following higher-than-expected domestic inflation data released last week.

13 May

Not

AUDUSD trades around 0.6600 during the European session. The pair is moving sideways with the prospect of forming a symmetrical triangle pattern and the RSI above 50 shows that the bullish outlook remains positive.

AUDUSD buyers could test the downtrend line (triangle resistance formation) at 0.6650. Breaking through this support, the bearish momentum could be extended to the March peak at 0.6667, then to the 0.6700 mark.

15 May

Not

AUDUSD rose above 0.6630 following the release of Q1 wage data

AUDUSD rises above 0.6630 following Q1 2024 wage data release amid USD weakness, DXY falls below 105.00

17 Haz

Not

1 Eki

Not

AUD/USD hit an 18-month high of 0.6942. China's brighter growth prospects act as the main driving force behind the strong recovery of commodity prices, serving as one of the premises that has helped AUD "stir up" the market recently.