AUD/USD keeps gains despite below-forecast Aussie Q1 PPI

• The AUD remains in a corrective mode, having hit 3.5-month lows below 0.70 yesterday, despite a below-forecast Aussie Q1 PPI release.  
• The gains, however, could be short-lived, courtesy of dovish RBA expectations.  

A weaker-than-expected Aussie first quarter producer price inflation (PPI) number released a few minutes ago has failed to inspire the AUD sellers.  

The AUD/USD pair is still trading at 0.7022 – a level seen before the release of the PPI data – representing a 0.10 percent gain on the day.  

The PPI rose 0.4 percent quarter-on-quarter in the first three months of 2019, having risen by 0.5 percent in the fourth quarter of 2018. The markets were expecting the PPI to tick higher to 0.6 percent.  

The annualized figure also came in a tad weaker-than-expected at 1.9 percent.  

Import price index or inflation imported from abroad dropped 0.5 percent versus -1.5 percent expected. Meanwhile, the export price index rose 4.5 percent in the first quarter, having risen by 4.4 percent in the fourth quarter of 2018.  

The below-forecast PPI comes two days after the release of weaker-than-expected consumer price inflation and would only bolster the dovish RBA expectations.  

So far, the PPI has failed to move the needle on the Aussie dollar, which is in a recovery mode, having hit a 3.5-month low of 0.6988 yesterday.  

The corrective bounce, however, could be short-lived with markets considering the possibility of an RBA rate cut next month.  

Technical Levels