AUD/USD made a move upwards and is less than 50 pips from parity once again. The Australian dollar enjoyed rising prices and high confidence from the central bank, and is likely to pause before any move higher. Update.
The Australian Producer Price Index (PPI) was a big surprise – it jumped by 1.3% in Q3, more than double the early expectations that stood on 0.6% and the highest jump since Q4 of 2008. The previous quarter saw a very modest rise of 0.3%.
This significantly raises the chance of a rate hike in Australia, especially after not raising the rates in the previous meeting. A similar surprise in the Consumer Price Index (CPI) will raise the certainty, as inflation needs to be curbed. A higher interest rate means a higher Australian dollar.
And speaking about the central bank, the governor of the RBA, Glenn Stevens, also sounded optimistic. Speaking in Canberra, Stevens expressed confidence in the Australian economy, despite global imbalances and the ongoing currency war.
As mentioned in the AUD/USD weekly outlook, parity is definitely a strong resistance line – it was only briefly reached. Below, there’s support at 0.9863, which was a significant line last week. It’s followed by 0.9750 and the strong 0.9660 line which supported AUD to USD last week.
The Aussie is currently trading around 0.9950. In order for a real and perhaps successful attempt on parity, AUD to USD needs to hold on to current levels for some time and not fall back as it did last week. Will AUD/USD parity be conquered?
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