- Australian inflation rose 2.1% in October, below estimates of 2.3%.
- The probability of an RBA rate cut in December remained low at 14%.
- All eyes are on the upcoming US GDP and inflation numbers.
AUD/USD forecast shows resilient Australia despite weaker Australian inflation data. Meanwhile, the dollar eased slightly as markets awaited key US economic figures for indications of future Fed policy moves.
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Australia released its CPI report on Wednesday, showing inflation rose 2.1 percent in October, below estimates of a 2.3 percent increase. However, it remained stable compared to the previous month when inflation also increased by 2.3%. Meanwhile, core inflation rose 3.5% after a 3.2% increase in the previous month.
The mixed report had little effect on bets on a rate cut by the Reserve Bank of Australia. As a result, the Austrians hardly reacted. The probability of a rate cut in December remained low and amounted to 14%, while in February it was 27%. Market participants fully determine the first rate cut in May next year. Policymakers have said they need more evidence that inflation is falling to consider cutting borrowing costs.
On the other hand, the dollar paused after recovering in the previous session due to Trump’s promise to impose tariffs on goods from China and Canada. Such an outcome will brighten the outlook for the US economy in the long run.
However, tariff optimism eased as markets turned their focus back to US economic data. All eyes are on the upcoming GDP and inflation numbers. Economists believe that the economy will grow by 2.8%. Meanwhile, they expect inflation to rise by 0.3%. The actual numbers will shape the outlook for the Fed’s December meeting.
AUD/USD key events today
- US Prelim GDP k/k
- US unemployment claims
- Core US price index PCE m/m
AUD/USD Technical Forecast: Consolidation Phase
From the technical side, AUD/USD the price recovered after failing to break the 0.6450 support level. However, it is still trading below the 30-SMA, indicating that the bears remain in charge. Furthermore, the RSI is trading just below 50 in bearish territory.
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However, there is a chance that the price will soon break above the 30-SMA as it has been trading in a range between the 0.6450 support and the 0.6550 resistance. Within this range, the price has crossed the SMA without a clear direction. If it breaks above, it will likely retest the range resistance. Otherwise, the bears will try to support the range again.
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