AUD/USD faces key test with US CPI and Aussie jobs data looming
The AUD/USD has found a bit of resistance around the 0.6640/0.6650 area ahead of the release of US CPI shortly.
The small pullback is largely due to profit-taking ahead of US inflation data and Australian employment data due for release in the early hours of Thursday. The underlying trend is bullish and so long as we don't see a hot inflation report from the US, the path of least resistance would remain to the upside.
The trend turned bullish on the Aussie ever since it created a false break reversal pattern beneath prior low around 0.6362. The sharp recovery from that level once it was reclaimed has lifted rates above several levels, including the 0.6500, 0.6565 and the 200-day average around 0.6600. These are now the key support levels to watch, especially the 0.6600 handle.
As mentioned, the focus is now turning to US inflation data. Following a weaker PPI report on Tuesday, investors will be hoping for a weaker CPI print today compared to a headline and core prints of +0.2% m/m expected (or 3.0% y/y for headline CPI).
If seen, or even if the data is line with forecasts, this could further cement expectations for a 50-basis point rate reduction in September and a total of 100 bp cuts for 2024. This scenario should further boost the AUD/USD outlook.
However, a strong print, which is evidently not priced in, could have a big negative impact on this and other major FX pairs.
By Fawad Razaqzada, market analyst at FOREX.com
The small pullback is largely due to profit-taking ahead of US inflation data and Australian employment data due for release in the early hours of Thursday. The underlying trend is bullish and so long as we don't see a hot inflation report from the US, the path of least resistance would remain to the upside.
The trend turned bullish on the Aussie ever since it created a false break reversal pattern beneath prior low around 0.6362. The sharp recovery from that level once it was reclaimed has lifted rates above several levels, including the 0.6500, 0.6565 and the 200-day average around 0.6600. These are now the key support levels to watch, especially the 0.6600 handle.
As mentioned, the focus is now turning to US inflation data. Following a weaker PPI report on Tuesday, investors will be hoping for a weaker CPI print today compared to a headline and core prints of +0.2% m/m expected (or 3.0% y/y for headline CPI).
If seen, or even if the data is line with forecasts, this could further cement expectations for a 50-basis point rate reduction in September and a total of 100 bp cuts for 2024. This scenario should further boost the AUD/USD outlook.
However, a strong print, which is evidently not priced in, could have a big negative impact on this and other major FX pairs.
By Fawad Razaqzada, market analyst at FOREX.com
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