- Australia’s second-quarter inflation decelerated more than anticipated.
- There is less pressure on the RBA for another rate hike.
- The National Australia Bank no longer expects an RBA rate hike in August.
Today’s AUD/USD price analysis is bearish. Australia’s second-quarter inflation decelerated more than anticipated. The decline was primarily due to reduced costs of domestic holidays and petrol. Consequently, there is less pressure for another RBA rate hike.
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In response to the data, investors reduced the probability of the RBA increasing rates at its upcoming meeting. Notably, futures now indicate a 31% chance of a quarter-point hike, down from the previous 50% probability before the inflation report.
The Australian Bureau of Statistics reported a 0.8% increase in the consumer price index for the second quarter. Moreover, it was the smallest gain since the third quarter of 2021, falling below the market’s forecast of 1.0%. In the first quarter, inflation was at 1.4%.
Furthermore, the annual pace of inflation slowed, reaching 6.0%, compared to the previous 7.0% and below the projected 6.2%. Consequently, the markets are now anticipating rates to peak at 4.32% by year-end, down from the earlier projection of 4.42%.
Elsewhere, the National Australia Bank no longer expects a rate hike in August after the CPI report. However, it warned of potential price increases in the current quarter due to wage pressures, higher energy costs, and elevated services inflation.
Similarly, Goldman Sachs adjusted its outlook, expecting the RBA to hike twice, reaching a peak cash rate of 4.6% instead of the previous forecast of 4.85%.
AUD/USD key events today
It will be a busy day for traders as they await major economic releases from the US. There will be housing data and the FOMC meeting that will likely cause a lot of volatility.
AUD/USD technical price analysis: Bulls stage a recovery to close above the 30-SMA.
On the charts, AUD/USD fell sharply below the 30-SMA before pulling back to close above. The price currently trades slightly above the SMA, with the nearest support at 1.6725 and the nearest resistance at 0.6800.
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Although bears tried to take control, they failed to keep the price below the SMA. This shows the bullish bias remains. Therefore, bulls will likely retest the 0.6800 resistance with the aim of making a higher high.
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