Market news

25 January 2023

AUD/USD marches towards 0.7136 hurdle on upbeat Aussie inflation, US GDP, Fed eyed

  • AUD/USD renews multi-day high on strong Aussie inflation report.
  • Quarterly Aussie CPI marked 7.8% YoY figures while RBA Trimmed Mean CPI also rose to 6.9% in Q4.
  • Mixed sentiment, cautious mood in market also weigh on the risk barometer pair.
  • US GDP is the key to watch amid growing support for Fed policy pivot.

AUD/USD jumps to a fresh high since August 15 after strong Australian inflation data please the bulls during early Wednesday. It should be noted, however, that the downbeat sentiment probes the pair due to its risk-barometer status.

That said, Australia’s fourth quarter (Q4) Consumer Price Index (CPI) rose to 7.8% YoY versus 7.5% expected and 7.3% prior while the RBA Trimmed Mean CPI jumped to 6.9% YoY compared to 6.5% market forecasts and 6.1% previous readings. Further, the Monthly CPI rose to 8.4% from 7.3% previous readings and 7.7% market forecasts.

Given the upbeat signals from the inflation data supporting the odds favoring the Reserve Bank of Australia’s (RBA) hawkish move, the AUD/USD prices rallied post-release.

Also read: Breaking: AUD/USD rallies hard on Aussie CPI beat

Other than the Aussie inflation data, the cautious mood in the market ahead of Thursday’s US growth numbers and the next week’s Federal Open Market Committee (FOMC) monetary policy meeting also weigh on the AUD/USD prices. However, mixed signals from the US data and receding hawkish Fed bets seem to put a floor under the Aussie pair.

As per the latest activity data from the US, the outcome has moderated in the last few months but the growth is yet to witness as January’s US S&P Global Composite PMI for January increased to 46.6 from 45.0 prior and the 44.7 consensus, marking the seventh consecutive read below 50. It’s worth observing that preliminary readings of the US S&P Global Manufacturing PMI for January rose past 46.2 market forecast and 46.1 market expectations with 46.8 figure while the Services PMI followed the suit with the 46.6 figure for the said month, versus 44.5 forecast and 44.7 prior.

After the mixed data, Fed fund futures signal the market’s receding hawkish bias. “Fed fund futures see only two more quarter-point rate hikes by the Fed to a peak of around 5% by June, before it starts cutting rates later in the year. The Federal Reserve itself has insisted it still has 75 bps of increases in the pipeline,” said Reuters.

Amid these plays, the S&P 500 Futures print mild losses while tracking Wall Street whereas the US 10-year Treasury yields remain dicey near 3.45%, down for the fourth consecutive week.

Moving on, the first readings of the US fourth-quarter (Q4) Gross Domestic Product (GDP), up for publishing on Thursday, will be crucial to watch for immediate directions. The reason appears logical due to the next week’s Federal Reserve (Fed) meeting, as well as the talks of the US recession. Forecasts suggest the world’s biggest economy eases with 2.8% annualized growth.

Also read: US Gross Domestic Product Preview: Three reasons to expect a US Dollar-boosting outcome

Technical analysis

Given the successful break of a one-week-old descending resistance line, around 0.7060 by the press time, the AUD/USD is on the way to the August 2022 peak surrounding 0.7136.

 

Market Focus

Material posted here is solely for information purposes and reliance on this may lead to losses. Past performances are not a reliable indicator of future results. Please read our full disclaimer.

Open Demo Account
I understand and accept the Privacy Policy and agree that my name and contact details can be used by TeleTrade to contact me about the information I have selected.
23 International Awards
Have a question?

We are ready to assist you in every step of your trading experience
by providing 24/5 multilingual customer support.

Follow us

Risk Warning: Trading Forex and CFDs on margin carries a high level of risk and may not be suitable for all investors. CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 77.94% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money. Prior to trading, you should take into consideration your level of experience and financial situation. TeleTrade strives to provide you with all the necessary information and protective measures, but, if the risks seem still unclear to you, please seek independent advice.

© 2011-2023 Teletrade-DJ International Consulting Ltd

This website is operated by Teletrade-DJ International Consulting Ltd, which is registered as a Cyprus Investment Firm (CIF) under registration number HE272810 and is licensed by the Cyprus Securities and Exchange Commission (CySEC) under license number 158/11. Teletrade-DJ International Consulting Ltd is located at 88, Arch. Makarios Avenue, 2nd floor, Nicosia Cyprus.

The company operates in accordance with the Markets in Financial Instruments Directive (MiFID).

The content on this website is for information purposes only. All the services and information provided have been obtained from sources deemed to be reliable. Teletrade-DJ International Consulting Ltd ("TeleTrade") and/or any third-party information providers provide the services and information without warranty of any kind. By using this information and services you agree that under no circumstances shall TeleTrade have any liability to any person or entity for any loss or damage in whole or part caused by reliance on such information and services.

TeleTrade cooperates exclusively with regulated financial institutions for the safekeeping of clients' funds. Please see the entire list of banks and payment service providers entrusted with the handling of clients' funds.

Please read our full Terms of Use.

To maximise our visitors' browsing experience, TeleTrade uses cookies in our web services. By continuing to browse this site you agree to our use of cookies.

Teletrade-DJ International Consulting Ltd currently provides its services on a cross-border basis, within EEA states (except Belgium) under the MiFID passporting regime, and in selected 3rd countries. TeleTrade does not provide its services to residents or nationals of the USA.

Material posted here is solely for information purposes and reliance on this may lead to losses. Past performances are not a reliable indicator of future results. Please read our full disclaimer.

CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 77.94% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
Choose your language/location