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  • Australia’s first quarter consumer price index missed estimates, sending the AUD lower across the board.  
  • AUD/JPY has dropped to 78.76 – 61.8% Fib R of 77.5/80.72.  
  • The key Fib hurdle could be breached as Australia’s 10-year government bond has dropped sharply on the back of weak data.  

The Australian dollar is fast losing altitude in response to the weaker-than-expected Australian first quarter consumer price index released at 01:30 GMT.  

The AUD/JPY pair has shed more than 50 pips and is currently trading at  78.76, which is the 61.8 percent Fibonacci retracement of the rally from 77.54 to 80.72.  

Australia’s inflation as represented by the consumer price index (CPI)  rose 0.3 percent quarter-on-quarter in the first three months of 2019, missing the expected 0.4 percent rise. The inflation had risen by 0.4 percent in the final quarter of 2018.  

The Reserve Bank of Australia’s (RBA) trimmed mean, which is widely considered a more reliable figure, rose 1.6 percent year-on-year, missing the estimate of 1.7 percent and down from the previous quarter’s print of 1.8 percent.  

The below-forecast CPI readings will likely reinforce the dovish RBA expectations. The central bank is widely expected to cut rates in the second half of this year, having ditched its long-held tightening bias in February.  

AUD/JPY, therefore, may find acceptance below the 61.8 percent Fib support of 78.76. Supporting that bearish case is the fact that Australia’s 10-year government bond yield has nosedived by eight basis points to 1.80 percent following the release of the dismal CPI reading.  

Pivot points