The AUDUSD currency pair was trading down for the day as the Aussie weakened against the US dollar during the American session following the release of mixed Australian CPI data during the early Asian session. The mixed data showed that Australian inflation was falling slower than expected.
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According to the latest data, Australian inflation rose 7% annually in Q1, beating analysts’ expectations of a 6.9% increase, while the CPI print rose 1.4% quarterly, exceeding analysts’ consensus estimates of 1.3%. However, both prints represented a significant drop from the previous figures.
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Today’s data caused investors and analysts to bet that the Reserve Bank of Australia (RBA) might have to hike interest rates by 25 basis points to bring down inflation despite pausing rate hikes at their last meeting earlier this month.
The RBA has paused rate hikes saying that it needed more time to assess the impact of previous rate hikes on the Australian economy. The robustness of the labour market continues to inspire confidence among investors in the country’s economy, but not everything is rosy.
While the unemployment rate remains at a five-decade low, there has been some softening in the number of new jobs as employers hold back from hiring in the face of the uncertainty created by the US banking crisis and the tight credit market.
Analysts are now pricing in a peak RBA interest rate of 3.81% by August 2023, marking a slight increase from the previous figure of 3.72% before the CPI data was released. The Aussie was one of a handful of currencies, including the New Zealand dollar, weaker than the US dollar as other leading currencies made gains against the dollar.
The Australian dollar is set to benefit from the recent recovery of the Chinese economy, given that China is Australia’s biggest export market. The recovery witnessed in China will likely spill over into Australia due to the economic ties between the two countries.
The AUDUSD currency pair has been falling after forming a double top pattern this month but is about to reach a crucial resistance level, which could trigger a bounce higher.
*This is not investment advice.
The AUDUSD price chart.
The AUDUSD currency pair was trading down 20.7 pips (0.31%) as the US dollar rallied against the Australian dollar.
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