Aussie CPI Slips

The Australian Dollar has fallen lower today on the back of the latest set of Aussie inflation figures overnight. CPI was seen cooling to 5.6% last month, down from the prior month’s 6.8% reading and below the expected 6.1% level the market was looking for.  On the back of a further unexpected rate hike earlier this month, the data supports the view that the RBA will likely hold off on a further hike at the next meeting. While RBA governor Lowe expressed his desire to bring inflation down at a quicker pace, he did say that further rate adjustments would be data dependent. As such, with inflation falling by more than 1% last month, the RBA likely has room to wait near-term and see how the next set of inflation figures come in before tightening again, if needed.

Powell Up Next

With expectations that the Fed will likely press ahead with further tightening at the next meeting, the divergence in market expectations towards the two central banks is weighing on AUDUSD here. With Powell due to speak later today at the ECB’s Sintra Forum, there is plenty of room for the current sell-off to gather pace if Powell reaffirms recent hawkishness.  

Technical Views

AUDUSD

The sell off from .6857 has seen the market breaking sharply lower. Price is now testing below the .6681 level and with momentum studies turned bearish the focus is on a further push lower and a test of the .6535 level next.