AUD/USD Price Analysis: Australia’s Inflation Pushing RBA for Hikes

• Australia’s inflation rose sharply in the September quarter to a 32-year high.
• Core inflation in Australia pushed beyond the forecasts to hit 6.1%.
• The RBA might be forced to resume its aggressive stance after the inflation report.

Today’s AUD/USD price analysis is bullish. The price of gas and home construction drove Australian inflation to a 32-year high last quarter. This startling development increased pressure on the country’s central bank to resume aggressive rate hikes.

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Consumer price index (CPI) data from the Australian Bureau of Statistics (ABS) on Wednesday revealed a 1.8% increase in the September quarter, exceeding 1.6% market expectations.

The yearly rate increased sharply from 6.1% to 7.3%, the highest level since 1990 and over three times the rate of wage growth. Core inflation pushed up to 6.1%, higher than the 5.6% forecast.

It is particularly unfortunate for the RBA because, after four moves of 50 basis points this month, it startled many by reducing speed to a quarter-point rate hike.

The RBA wanted to increase rates gradually to see how the sharp tightening affected consumer spending because rates have increased by a whopping 250 basis points since May.

Investors now believe that the central bank may need to make a change, possibly not at its policy meeting next week but rather in December.

Futures now indicate a slight possibility of a half-point increase in December and a peak for rates at 4.20% in July. They, however, still predict a quarter-point advance on November 1 to 2.85%.

AUD/USD key events today

Investors will pay attention to the new home sales report from the United States. It estimates the annualized number of new single-family homes sold over the previous month.

AUD/USD technical price analysis: Bulls looking to post a higher high above 0.6401

Looking at the 4-hour chart, we see the price trading well above the 30-SMA and the RSI above 50, showing bulls are in charge. The price trades within a bullish channel with clear support and resistance lines, further confirming the uptrend.

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Bulls have paused at the 0.6401 previous high and will likely take it out for a new high. A break above this level would allow the bulls to head for the next resistance level at 0.6500. The bullish bias will remain if the price stays above the 30-SMA.

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