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AUD/USD pares losses ahead of RBA rate decisionThe Australian dollar is showing some movement right off the bat on Monday. AUD/USD fell as much as 70 pips in the Asian session but has recovered most of those losses. In the European session, AUD/USD is trading at 0.6657 down 0.03%. The Reserve Bank of Australia meets on Tuesday, and it's a coin-toss as to whether the central bank will raise rates for a third straight time or will it take a pause. Traders have priced in a 52% chance of a pause, according to the ASX RBA rate tracker. Just one week ago, the odds of a pause were 70%, after May inflation declined more than expected. Headline CPI fell from 6.8% to 5.6%, its lowest level in 13 months. Core CPI eased to 6.1%, down from 6.7%. The split over what call the RBA will make on Tuesday is indicative of the case that can be made both for a hike and a pause. The drop in inflation is certainly welcome news, but the RBA wants inflation to fall faster, as it remains almost triple the target of 2%. Additional rate hikes would likely send inflation lower, but that would raise the risk of the economy tipping into a recession. The Australian economy has cooled down, but the labor market remains strong and consumer spending has been resilient, despite high inflation. Retail sales for May jumped 0.7% m/m, up from 0.0% in April and smashing the consensus of 0.1%. RBA members in favor of a hike can point to employment and retail sales data as evidence that the economy can withstand additional hikes. The RBA minutes, which can be considered a guide to its rate policy plans, might point to a pause at Tuesday's meeting. The April and May minutes were hawkish and the RBA raised rates after these releases. The June minutes were more dovish, sending the Australian dollar lower. Could that signal a pause? In the US, the week wrapped up with the PCE Price Index, the Fed's preferred inflation indicator. In June, the index rose 0.1% m/m, down from 0.4% in May. This indicates that the disinflation process continues and traders have raised the probability of a July hike to 88%, up from 74% a week ago, according to the CME FedWatch tool. 0.6659 is a weak resistance line. Above, there is resistance at 0.6722 0.6597 and 0.6534 are providing support
by OANDA
AUD/USD pushes higher, CPI nextThe Australian dollar is in positive territory on Tuesday. AUD/USD rose as high as 50 pips earlier but has pared these gains and is trading at 0.6685, up 0.16%. The Australian dollar is showing some life after last week's awful performance, in which it declined by 2.87%. On Wednesday, Australia releases the monthly inflation report for May. Inflation is expected to ease to 6.1% y/y, down from 6.8% in April. If the consensus is accurate, this would mark the lowest inflation level since March. The Reserve Bank will be keeping close tabs on the inflation release, especially core CPI, which is a more accurate gauge of inflation trends. The core rate fell from 6.9% to 6.5% in April, but that is incompatible with a 2% inflation target, and the RBA will need to see core inflation fall much more quickly before it can think about winding up the current rate-tightening cycle. The markets have priced in a rate pause from the Reserve Bank of Australia at 77%, and a significant drop in inflation on Wednesday should cement a pause at the July meeting. The RBA surprised the markets earlier this month when it raised rates by 25 basis points, bringing the cash rate to 4.35%. The minutes of the meeting indicated that the decision to hike was close, and a key factor in the decision was concern over persistently high inflation. The central bank is well aware of the pain inflicted on households and businesses due to rising rates, and a pause in rate hikes would provide some relief, as well as allow the RBA to monitor the effects of its rate policy. At the same time, the central bank has made it absolutely clear that its number one goal is curbing high inflation, which means Wednesday's inflation release could have a significant effect on the direction of the Australian dollar. AUD/USD put pressure on resistance at 0.6729 in the Asian session. Above, there is resistance at 0.6823 0.6598 and 0.6518 are providing support
by OANDA
AUD/USD drifting lower ahead of RBA minutesThe Australian dollar has started the week with losses. AUD/USD is trading at 0.6848, down 0.39%. The Australian dollar gained 1.95% last week and has soared 5.2% in the month of June. The Reserve Bank of Australia releases the minutes of the June meeting on Tuesday. At the meeting, the Bank decided to raise rates by 0.25%, bringing the benchmark rate to 4.10%. This surprised the markets, which had expected the central bank to pause. Governor Lowe continued his hawkish stance after the decision, defending the interest rate as necessary since "upside risks to the inflation outlook have increased". Lowe has his hands full with sticky inflation, which rose in April from 6.3% to 6.8% y/y, above the consensus of 6.4%. The core rate fell from 6.9% to 6.5%, but this is much too high for the RBA, which has a target of 2%. The RBA has projected that inflation will not fall to 2% until mid-2025, leaving little doubt that the current rate-hike cycle is not close to wrapping up. The minutes should provide insights about the rate hike and what the central bank has planned moving forward. The RBA meets next on July 4th. The Fed is also very concerned with inflation but took a different approach, as it paused at last week's meeting after ten consecutive hikes. Fed policymakers got some good news on Friday, as UoM inflation expectations eased to 3.3% in June, down sharply from 4.2% in May and lower than the 4.1% consensus. Inflation expectations haven’t been this low since March 2021 and this is another indication that inflation is heading lower. The UoM Consumer Sentiment report climbed from 59.2 to 63.9, due to lower inflation expectations as well as the resolution of the banking crisis, according to the report. AUD /USD tested support at 0.6836 earlier. Next, there is support at 0.6729 0.6940 and 0.7004 are the next resistance lines
by OANDA
AUDNZD Potential UpsidesHey Traders, In today's trading session, we are paying close attention to the AUDNZD currency pair, as we believe there might be an opportunity to buy around the 1.09600 zone. From a technical standpoint, AUDNZD is currently in an uptrend but experiencing a corrective phase. It is approaching a significant support zone around 1.09600, which adds to its appeal as a potential buying opportunity. From a fundamental perspective, it's worth noting that the Reserve Bank of Australia (RBA) is still in the process of gradually raising interest rates. This indicates their intention to tighten monetary policy in order to manage the economy. On the other hand, the Reserve Bank of New Zealand (RBNZ) has officially halted any further rate hikes, suggesting a more stable or potentially looser monetary policy approach. Considering both the technical and fundamental factors, the current market conditions suggest that the AUDNZD pair could present an attractive buying opportunity near the 1.09600 support zone. Trade safe, Joe.
Long
by JoeChampion
8
AUD/USD rally continues, Fed decision loomsThe Australian dollar continues to gain ground and is trading at 0.6795, up 0.42%. The Aussie has been red-hot in June, gaining 4.4%. Australia releases the May employment report early Thursday. The labour market has stayed solid despite aggressive rate hikes from the central bank, but there may be signs of cracks. In April, Australia shed jobs for the first time in three months, including 27,100 full-time jobs. The RBA won't be able to pause rates for an extended period unless it is convinced that the labour market is cooling down. The economy is expected to have gained 15,000 jobs in May and the unemployment rate is projected to remain at 3.7%. US headline inflation fell to 4.0% in May, down from 4.9% and the lowest level since March 2021. This was positive news, but the decline was driven by a drop in lower food and energy prices. Core CPI, which excludes food and energy, fell from 5.5% to 5.3%, a modest drop. Core CPI at its current level is not compatible with the Fed's 2% target, which will likely mean more rate hikes unless the core rate decelerates at a faster clip. The highlight of the week is the Fed rate decision later today. The markets are widely expecting a pause, which would break the streak of ten straight rate hikes. The rate decision may be a foregone conclusion, but the rate statement and Powell press conference could shed some light on what the Fed has planned next. If the Fed stresses that the current tightening cycle is not over, it could dampen risk sentiment and provide some support to the US dollar. AUD /USD is putting pressure on resistance at 0.6804. Next, there is resistance at 0.6863 0.6729 and 0.6632 are providing support
by OANDA
1
AUD/USD hits one-month high, Chinese inflation eyedThe Australian dollar has bounced back on Thursday after losing ground on Wednesday. AUD/USD is trading at 0.6681, up 0.42% on the day. The Australian dollar touched a high of 0.6690 on Wednesday, its highest level in a month. The RBA surprised the markets with a rate hike on Wednesday, noting that inflation had unexpectedly risen in April and GDP in the first quarter was higher than the RBA had predicted. The RBA statement said that more tightening might be needed "to ensure that inflation returns to target in a reasonable timeframe". Lowe was even more candid in remarks at a public engagement on Wednesday, saying that the Bank has been patient in the battle to get inflation back to the 2-3% target "but our patience has a limit and the risks are testing that limit.” Lowe appeared to be referring to the upside risk in inflation, and he could be hinting at a "higher and longer" stance with rate policy until inflation returns closer to target. Inflation has peaked, but at the current level of 7%, Lowe may be sending a message that inflation is falling far too slowly and he's prepared to keep raising rates, even if this results in a hard landing for the economy. China will release inflation data on Friday. Inflation is projected to rise to 0.3% in May, up from 0.1% in April. An improvement from the April reading would reduce concerns that China could be facing disinflation and may have to respond by cutting interest rates. On Wednesday, China released soft trade data, which showed exports fell by 7.5%. This has raised doubts about China's economic recovery. The Australian dollar, which is highly sensitive to Chinese data, lost ground following the release. AUD/USD continues to test resistance at 0.6677. Above, there is resistance at 0.6749 There is support at 0.6568 and 0.6496
by OANDA
Further Upside for the AUDUSDThe RBA surprised markets by hiking rates 25bps, taking interest rates in Australia to 4.1%. This decision saw the AUDUSD rise steadily from the 0.66 price level up toward the 0.67 resistance level. As the price maintains above the bullish ichimoku cloud and the 200MA signals further upside potential, look for the AUDUSD to break above the 0.67 resistance level to trade up toward the next resistance and round number level of 0.68. This move higher would need to be supported by further weakness in the DXY (checkout DXY analysis in the link)
Long
by JinDao_Tai
AUD/USD rises to 1-month high, shrugs off soft GDPThe Australian dollar has extended its rally on Wednesday. AUD/USD is trading at 0.6689, up 0.28%. Today's weak GDP report and soft Chinese trade data haven't spoiled the party, as the Australian dollar is up 1.2% this week. Australia's GDP slowed to 0.2% in the first quarter, down from 0.6% in Q4 2022 and missing the consensus of 0.3%. On an annual basis, GDP fell to 2.3%, following a 2.7% gain in Q4 2022 and shy of the consensus of 2.4%. The economy is cooling down, and that really shouldn't come as a surprise. The cost of living crisis, rising interest rates and weaker demand have taken a bite out of economic activity. China's reopening has faltered, as May trade data showed a decline in exports and imports. This is bad news for Australian exporters, as their largest market is China. The GDP report was released just hours after the RBA announced a 25-basis point rate hike. The RBA has surprised the markets with two straight rate hikes as it wages a relentless war against inflation, which isn't coming down fast enough for the central bank. Governor Lowe reiterated after the decision that the RBA would do whatever it takes to bring inflation back down to its 2-3% target, from the current 7%. Core inflation has been stickier than expected and that means that more rate hikes can be expected. The cash rate is currently at 4.10% and the RBA has looked at different scenarios in which the cash rate peaked at 4.8%. The RBA may not actually move to that level, as the danger of a recession would be high, but there's little doubt that more rate hikes are on the way. AUD/USD is testing resistance at 0.6677. Above, there is resistance at 0.6749 There is support at 0.6568 and 0.6496
by OANDA
1
AUDUSD Potential Forecast | 6th June 2023 Fundamental Backdrop RBA hike rates by 0.25bps today, resulting in strong bullish momentum. RBA hiking rates highlights the stubborn level of inflation that AUD faces. Technical Confluences Near term resistance level at 0.67066 where price can potentially react to. 0.67066 will serve as a point of target. Idea Will wait for retracement before entering onto longs. NOT FINANCIAL ADVICE DISCLAIMER The trading related ideas posted by OlympusLabs are for educational and informational purposes only and should not be considered as financial advice. Trading in financial markets involves a high degree of risk, and individuals should carefully consider their investment objectives, financial situation, and risk tolerance before making any trading decisions based on our ideas. We are not a licensed financial advisor or professional, and the information we are providing is based on our personal experience and research. We make no guarantees or promises regarding the accuracy, completeness, or reliability of the information provided, and users should do their own research and analysis before making any trades. Users should be aware that trading involves significant risk, and there is no guarantee of profit. Any trading strategy may result in losses, and individuals should be prepared to accept those risks. OlympusLabs and its affiliates are not responsible for any losses or damages that may result from the use of our trading related ideas or the information provided on our platform. Users should seek the advice of a licensed financial advisor or professional if they have any doubts or concerns about their investment strategies.
Long
by OlympusLab
AUD/USD extends gains after RBA surpriseThe Australian dollar continues to roll and has extended its rally on Tuesday. In the European session, AUD/USD is trading at 0.6659, up 0.63% on the day. The Aussie has sparkled in June, surging 2.4%. On the economic calendar, Australia releases GDP early on Wednesday. The markets are expecting a solid gain of 2.7% in the first quarter, up from 2.4% in Q4 2022. The markets were confident that the RBA would pause at today's meeting, projecting a 67% chance of a hike. I wrote yesterday that although a pause was likely, Governor Lowe has a habit of surprising the markets. Well, make that the second straight month that the markets have guessed wrong about a pause, with the RBA hiking each time by 25 basis points. Even with the surprise hike, the benchmark cash rate of 4.10% remains below most of the major central banks, including the Federal Reserve. Australian inflation has been heading in the right direction, dropping from 7.8% to 7.0% in April. This is evidently not fast enough for the RBA, which has a target of 2-3%. Governor Lowe has been hawkish and said last week that the Bank will do whatever it takes to bring inflation back down to target so perhaps the real surprise is why the markets keep expecting a pause when Lowe keeps repeating that inflation is way too high. Lowe reiterated this position in the rate statement, saying that "inflation in Australia has passed its peak, but at 7% is still too high and it will be some time yet before it is back in the target range". Households and businesses will feel even more pain from the hike, but that's a price the RBA believes is necessary to beat public enemy number one - inflation.
by OANDA
Aussie Shows Short-term Bullish Formation Ahead of RBAStocks, USD and US yields are again moving in the same direction, so we may expect that one should give up this week. On overlay chart of XXX/USd pairs, we can Aussie with some impressive run from last week that occurred, before US yields stabilized, and the reason for the relatively strong AUD was the release of Australian inflation figures that came out worse than expected, 6.8%, but still below 7% from previous reading. So there is a chance that RBA will be more hawkish this week, meaning that Aussie can stay in intraday uptrend, which certainly can be the case if we consider that recovery from the low was sharp and looks like an impulse, so more gains can be seen after a-b-c retracement. Traders will have a close eye on this one for potential traders going into the RBA rate decision. We see nice support at 0.6560, while upward projection is at 0.6675-0,67, This view is unchanged while price is above 0.6459. Make sure you dont miss our next free webinar here on Tradingview. Link is below.
by ew-forecast
AUDUSD Weekly Forecast CashRate | 4th June 2023Fundamental Backdrop RBA Gov Lowe mentioned "Very Much in Data-Dependent Mode on Interest Rates", "Monetary Policy in Restrictive Territory" This means that the RBA is closely monitoring economic data and could potentially continue increasing interest rates CPI y/y also increased from 6.3% to 6.8%, this shows inflation is still on a strong rise which can lead to an increase in interest rates. Cash Rate on Tuesday expected to maintain at 3.85% Technical Confluences Near-term resistance level at 0.66196 Next resistance at 0.67860 Near-term support level at 0.65220 Idea If the RBA chooses to maintain its cash rate at 3.85% on Tuesday, we could see the AUD drop towards the near-term support at 0.65220. However, if the unexpected occurs and the RBA chooses to increase its interest rates, we could see the price rise above the near-term resistance level at 0.66196, before heading towards the next resistance at 0.67860. NOT FINANCIAL ADVICE DISCLAIMER The trading related ideas posted by OlympusLabs are for educational and informational purposes only and should not be considered as financial advice. Trading in financial markets involves a high degree of risk, and individuals should carefully consider their investment objectives, financial situation, and risk tolerance before making any trading decisions based on our ideas. We are not a licensed financial advisor or professional, and the information we are providing is based on our personal experience and research. We make no guarantees or promises regarding the accuracy, completeness, or reliability of the information provided, and users should do their own research and analysis before making any trades. Users should be aware that trading involves significant risk, and there is no guarantee of profit. Any trading strategy may result in losses, and individuals should be prepared to accept those risks. OlympusLabs and its affiliates are not responsible for any losses or damages that may result from the use of our trading related ideas or the information provided on our platform. Users should seek the advice of a licensed financial advisor or professional if they have any doubts or concerns about their investment strategies.
Short
by OlympusLab
1
AUDUSD SELL | CPI, RBA Gov Lowe speaks | 31st May 2023Fundamental Backdrop RBA Gov Lowe spoke today He mentioned "Very Much in Data-Dependent Mode on Interest Rates", " "Monetary Policy in Restrictive Territory" This means that the RBA is closely monitoring economic data and could potentially continue increasing interest rates CPI y/y also increased from 6.3% to 6.8%, this shows inflation is still on a strong rise which can lead to the increase in interest rates. Technical Confluences Near-term resistance level at 0.65100 Near-term support level at 0.64150 Idea Today's speech by RBA Gov Lowe indicates towards raising more interest rates in the future. Based on previous data whenever the RBA raises interest rates, the AUD rises a few days before it drops. We could see the AUD head towards the next support level at 0.64150 if interest rates are raised on 6th June. NOT FINANCIAL ADVICE DISCLAIMER The trading related ideas posted by OlympusLabs are for educational and informational purposes only and should not be considered as financial advice. Trading in financial markets involves a high degree of risk, and individuals should carefully consider their investment objectives, financial situation, and risk tolerance before making any trading decisions based on our ideas. We are not a licensed financial advisor or professional, and the information we are providing is based on our personal experience and research. We make no guarantees or promises regarding the accuracy, completeness, or reliability of the information provided, and users should do their own research and analysis before making any trades. Users should be aware that trading involves significant risk, and there is no guarantee of profit. Any trading strategy may result in losses, and individuals should be prepared to accept those risks. OlympusLabs and its affiliates are not responsible for any losses or damages that may result from the use of our trading related ideas or the information provided on our platform. Users should seek the advice of a licensed financial advisor or professional if they have any doubts or concerns about their investment strategies.
Short
by OlympusLab
Aussie unchanged ahead of Lowe, CPIThe Australian dollar is drifting lower on Tuesday. AUD/USD is trading at 0.6538 in Europe, unchanged on the day. RBA Governor Lowe testifies before a Senate Committee later today. Lawmakers will likely press Lowe about rate policy and the battle against inflation. Earlier this month, the RBA shocked the markets by delivering a 25-basis point hike. At the April meeting, the RBA had paused in order to assess the effect of its aggressive rate-hike cycle, and the markets had expected another pause at the May meeting. Lowe will have to reassure the committee that the RBA is following a plan and is not zig-zagging between hikes and pauses. Attention will quickly shift to inflation, with the release of Australian CPI on Wednesday. Inflation has been falling, and the downturn is expected to continue, with a consensus estimate of 6.4%, down from 7.0% prior. The RBA has pledged to bring inflation back down to its 2% target, but there's no doubt that it will be a long and bumpy road. The central bank meets on June 6th and is widely expected to pause and maintain the benchmark rate at 3.85%. The US debt ceiling agreement is a done deal. Well, almost. President Biden and Republican Speaker McCarthy have reached an agreement in principle which must be ratified by both houses of Congress. Some Republicans have threatened to vote against the deal, but with overwhelming support from the Democrats, approval of the deal is very likely. The weeks of uncertainty prior to the deal weighed on risk appetite, and the big winners have been US Treasury yields and the US dollar. There is resistance at 0.6665 and 0.6756 0.6525 is a weak support line, followed by 0.6434
by OANDA
1
Debt ceiling aside, watch the dollar and central bank meetings!As the debt ceiling discussions draw to a close, the dollar's rally indicates that markets have largely priced in this event. The focus now returns to the Federal Reserve (Fed) and its notably hawkish stance. Fed officials' recent statements and fed fund futures, which are pricing in another rate hike in the upcoming meeting, suggest it might be the right time to reassess the dollar pairs. Two weeks ago, we discussed the USDCNH pair, which made a swift upward move. Interestingly, the correlation between USDCNH and USDAUD has been increasing, and USDCNH has been a leading indicator for the last few moves, with USDAUD following its trend shortly after. To understand why, let's look at the AUDCNH as well as the USD. The moves in these pairs seem to be largely driven by the USD, as the AUDCNH has remained range-bound since 2022. The Reserve Bank of Australia (RBA) is scheduled to meet on June 6th and is expected to maintain its policy, while the Fed will meet on June 13th and is expected to hike rates. This divergence in monetary policies could further strengthen the case for a USDAUD rally. Current yield differentials continue to favour the USD carry trade and this trend appears set to continue as the Fed is expected to raise rates while the RBA remains on hold, widening the yield differentials. With the Fed poised for another rate hike and the RBA expected to maintain its policy stance, along with the dollar's strengthening and the USDCNH leading the AUDUSD pair, we could express our market views via a risk-managed trade long on the USD and short on the AUD. To set up this position, we can take a short position on the Micro AUD/USD futures, with stop-loss orders placed at 0.673 and take-profit orders at 0.627. A Micro AUD/USD futures contract represents 10,000 AUD, with each point move in AUD equalling USD 10,000. The charts above were generated using CME’s Real-Time data available on TradingView. Inspirante Trading Solutions is subscribed to both TradingView Premium and CME Real-time Market Data which allows us to identify trading set-ups in real-time and express our market opinions. If you have futures in your trading portfolio, you can check out on CME Group data plans available that suit your trading needs www.tradingview.com Disclaimer: The contents in this Idea are intended for information purpose only and do not constitute investment recommendation or advice. Nor are they used to promote any specific products or services. They serve as an integral part of a case study to demonstrate fundamental concepts in risk management under given market scenarios. A full version of the disclaimer is available in our profile description. Reference: www.cmegroup.com www.cmegroup.com
Short
by inspirante
3
AUDUSD Weekly Forecast | 29th May 2023Fundamental Backdrop RBA Gov Lowe speaking on Wednesday. He repeated that the RBA would have to resort to the only “blunt instrument” at its disposal, which was to keep increasing interest rates. Previously an increase to the interest rates only caused the AUD to weaken further. Technical Confluences Near-term resistance level at 0.65700 Near-term support level at 0.65200 Next support at 0.64150 Idea This Wednesday if he is dovish on his speech towards raising more interest rates in the future, we could see the AUD head towards the next support level at 0.64150. NOT FINANCIAL ADVICE DISCLAIMER The trading related ideas posted by OlympusLabs are for educational and informational purposes only and should not be considered as financial advice. Trading in financial markets involves a high degree of risk, and individuals should carefully consider their investment objectives, financial situation, and risk tolerance before making any trading decisions based on our ideas. We are not a licensed financial advisor or professional, and the information we are providing is based on our personal experience and research. We make no guarantees or promises regarding the accuracy, completeness, or reliability of the information provided, and users should do their own research and analysis before making any trades. Users should be aware that trading involves significant risk, and there is no guarantee of profit. Any trading strategy may result in losses, and individuals should be prepared to accept those risks. OlympusLabs and its affiliates are not responsible for any losses or damages that may result from the use of our trading related ideas or the information provided on our platform. Users should seek the advice of a licensed financial advisor or professional if they have any doubts or concerns about their investment strategies.
Short
by OlympusLab
Aussie Resumes An Impulsive Weakness Following a recent decline in US stock markets, the USD is showing signs of strength, with DXY trading at a new high. Fitch Ratings has placed the United States' AAA rating on a negative rating watch due to concerns regarding the debt ceiling negotiations. Fitch Ratings suggests that these negotiations have increased risk of the government potentially defaulting on certain financial obligations, so speculators sold stocks especially as a lot of investors will not take a risk and hold stocks through long weekend. Keep in mind that there is a holiday on Monday in US and some EU countries as well. This can trigger more weakness going into the end of the week, so USD can stay strong. Looking at the AUDUSD chart, we see nice ongoing weakness, now headed down for wave C which has room for further drop untill five waves down from 0.680 are done.
by ew-forecast
AUD/USD climbs, RBA likely to pauseThe Australian dollar has started the week with gains. In the North American session, AUD/USD is trading at 0.6636, up 0.25%. The Reserve Bank of Australia is widely expected to pause rates for a second straight month at Tuesday's policy meeting. The latest inflation numbers indicated that inflation fell from 7.8% to 7.0% in the first quarter. This is much too high for the RBA, but if inflation continues to drop in large increments, the central bank may be able to forego further rate hikes. The RBA has tightened dramatically over the past year, and the rate hikes are having an effect on the economy and on lowering inflation. The markets have priced in a 100% chance of a pause on Tuesday, according to the ASX RBA rate tracker, but some analysts feel there is an outside chance of a 25-basis point hike, given that inflation remains much higher than the 2% target. The RBA is trying to guide the economy to a soft landing, and the deceleration in inflation is welcome but poses a challenge as to whether further rate hikes are needed or whether will inflation continue to fall without additional tightening. The Fed meets a day after the RBA, and the markets have priced in an 89% chance of a 25-basis point hike, according to the CME Group, up from 83% on Friday. What will be interesting is if there any dissenting votes, after a unanimous vote in March to raise rates by 25 bp. With inflation heading lower, there are concerns that the Fed's aggressive rate tightening could push the economy into a recession and that it's time for a pause. The banking crisis, which has claimed First Republic Bank as its most recent victim, has resulted in tighter credit conditions which are equivalent to a 25-bp or even a 50-bp rate hike. That should translate into the Fed winding up its tightening cycle earlier than it anticipated, and Wednesday's decision could well be the final rate hike in the current cycle. In the US, the ISM Manufacturing PMI rose to 47.1 in April, above the forecast of 46.6 and the March reading of 46.3. Manufacturing continues to falter and has contracted for seven straight months, with readings below the 50.0 level. AUD/USD is testing resistance at 0.6632. The next resistance line is 0.6664 0.6558 and 0.6434 are providing support
by OANDA
AUD/USD slips to 2-week low ahead of CPIThe Australian dollar has plunged on Tuesday. AUD/USD is trading at 0.6632, down 0.95% on the day. The Aussie is under strong downward pressure, having lost around 1.7% since Thursday. Australia releases inflation on a quarterly basis, which magnifies the impact of the release. Inflation has been falling and this trend is expected to continue in the Wednesday release of first-quarter CPI. The headline figure is expected to fall from 7.8% to 6.9% y/y and from 1.9% to 1.3% q/q. The core rate, which is considered a more reliable gauge, is likewise expected to fall - from 6.9% to 6.7% y/y and from 1.7% to 1.4% q/q. Investors will be mindful that headline inflation surprised on the upside in Q4, rising from 7.3% to 7.8%. The two monthly inflation reports since the Q4 release in January, however, indicated that inflation was back on its way down, with headline CPI falling from 7.4% to 6.8% and beating expectations. The RBA would love to pause rates at 3.60% for a second straight month, and another drop in inflation would strongly support a pause at the May 2nd meeting. As well, another deceleration would be a strong indication that inflation has peaked, although the battle is far from over as it will take a long time to achieve the 2% target. The likelihood of another pause in rates stands at 83%, according to the RBA Rate Tracker. In the US, today's data has been a mixed bag. UoM Consumer Sentiment for April was expected to remain unchanged at 104.0, but surprised on the downside, falling to 101.3. There was better news from New Home Sales, which soared 9.6% in March, rebounding from -3.9% in February and crushing the estimate of 1.1%. There is resistance at 0.6751 and 0.6808 AUD/USD is testing support at 0.6657. Next, there is support at 0.6572
by OANDA
AUDCAD LongsI'm liking AUDCAD longs for a few reasons. Technical wise we have broken structure and we have a fib at the 61.8 from the swing high to swing low.. Looking at everything from a fundamental standpoint, there is a lot of optimism around the Aussie gaining strength from China reopenings, as well as a Hawkish RBA. Canada on the other hand has decided to pause rates and might continue to do so if the BoC see that inflation is starting to decelerate as well. This trade might take some time as most aussie pairs are slower but overall I like this trade.
Long
by EricDowdell