Australian dollar traders are eagerly awaiting the release of the latest CPI data early in the Asian trading session on Wednesday as pricing of the RBA’s next rate move continues to fluctuate in the market. Last month’s Quarterly CPI print surprised markets when it came in showing a 1% increase against the expected 0.8% rise as did the yearly figure which came in at 3.5% against the expected 3.4%.
Wednesday’s yearly data print is expected to show some slight easing again with the rate coming down to 3.4%, and other recent data prints would appear to support that theory, with both the Wage Price Index data and Unemployment rate indicating a tightening in that sector.
The Aussie dollar has seen good support over recent weeks and is now over 2% higher this month and nearly 5% up from its yearly low that it hit in Mid-April, however a lower print tomorrow, which could push the RBA to pull its hawkish bias, aligned with fading optimism on a swift rebound in the Chinese economy could see the currency start to feel some pressure over the longer term. The perfect storm for Aussie bears could come with a weaker Aussie CPI result tomorrow followed by a ‘sticky’ number from the US on Friday. A much stronger print than expected and it would appear that all bets will be off for a rate cut this year and we could see the currency jump into a fresh range.
The currency recently topped out near long term trendline resistance on the Daily charts just above 67 cents and that level will be a key focus moving into this data release, with longer term resistance now sitting at the December high near 69 cents. Initial support now comes in on the 200-Day Moving Average at 0.6532 with longer term support now on the downside trendline near 64 cents.
Resistance 2 : 0.6900 – December 2023 High – Triple Top
Resistance 1 : 0.6715 – Trendline Resistance – May High
Support 1 : 0.6532 – 200-Day Moving Average
Support 2 : 0.6400 – Trendline Support
