- Australia’s monthly consumer price index (CPI) increased by 5.2% year-on-year.
- Core inflation in Australia dipped from 5.8% to 5.5%.
- Market pricing suggests an RBA rate hike is not likely until May next year.
The AUD/USD price analysis indicates a bearish sentiment, primarily due to Australia’s August inflation data aligning with forecasts and a decrease in core inflation. Consequently, it eases the central bank’s urgency to consider raising interest rates in the upcoming month.
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Notably, the country’s monthly consumer price index (CPI) increased by 5.2% year-on-year, up from the previous month’s 4.9%. It marked the first acceleration in four months. However, this rise was primarily driven by surging fuel prices due to global supply factors.
Meanwhile, a key inflation measure, which excludes volatile items and holiday travel, dipped from 5.8% to 5.5%. In response to this data, markets slightly increased the likelihood of the Reserve Bank of Australia maintaining interest rates for a fourth consecutive month. Moreover, market pricing suggests a rate hike is not likely until May next year.
Stephen Wu, an economist at the Commonwealth Bank of Australia, characterized the August inflation uptick as a temporary deviation from the declining trend observed since December last year. Furthermore, he anticipates that the RBA will likely share this perspective during next Tuesday’s meeting for the October rate decision.
Nevertheless, some economists anticipate one more rate hike by the end of the year, possibly in November, following the release of the third-quarter inflation report. The RBA has raised rates by 400 basis points since May of the previous year. The central bank has also cautioned that further rate increases may be necessary to rein in inflation.
AUD/USD key events today
Investors will get key economic reports today from the US, including the following:
- The core durable goods orders report.
- The crude oil inventories report.
AUD/USD technical price analysis: Market bears set sights on 0.6360 support.
On the charts, the AUD/USD price has made a new low after breaking below the 0.6400 key support level. Consequently, the bearish bias has strengthened. The price has fallen far below the 30-SMA, showing bears are holding the reins.
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Meanwhile, the RSI shows strong bearish momentum as it moves closer to the oversold region. The decline will likely continue since the bearish bias is strong. Bears are currently targeting the next support level at 0.6360.
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Saqib Iqbal
