- Consumer inflation in Australia increased by 3.6% in April.
- Expectations for an increase in interest rates by RBA in September increased from 12% to 20%.
- The US CB report on consumer confidence revealed a jump from 97.5 to 102.0 in May.
AUD/USD price analysis shows slight bullish sentiment as investors absorb news of higher-than-expected inflation in Australia. However, the dollar was also strong after upbeat US data, putting a lid on price gains for the AUD/USD pair.
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Data on Wednesday revealed that consumer inflation in Australia rose 3.6% in April, beating forecasts of 3.4%. Moreover, this is an increase from 3.5% in March. The report led to a drop in expectations of an RBA rate cut, but the impact on the AUD/USD price was small.
Meanwhile, expectations for an interest rate hike by the Reserve Bank of Australia in September rose from 12% to 20%. At the same time, investors pushed back the time for the first rate cut to August next year. This puts the RBA well behind most major central banks.
However, economists still expect the central bank to implement the first interest rate cut in Q4. The reaction to the jump in inflation would have been more significant if the dollar had been weaker. However, the dollar was also strong after data in the previous session showed a jump in US consumer sentiment. The CB report on consumer confidence revealed an increase from 97.5 to 102.0 in May, giving investors more reason to doubt the Fed’s rate cut in September. Markets now have a better chance of the Fed cutting rates in November or December.
AUD/USD key events today
Investors will continue to absorb the Australian inflation report as no key event comes from the US.
AUD/USD Price Technical Analysis: Price is rising after retesting 30-SMA
On the technical side, the AUD/USD price has retested the 30-SMA support and is bouncing higher, a sign that the bulls are in the lead. At the same time, the RSI is moving deeper into bull territory after retesting the 50 level.
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Although the price has broken below its previous bullish trendline, it has not yet confirmed a new bearish trend. To do so, the bears must break below the 0.6600 level to make a lower low. However, at the moment, the price is looking at the resistance level of 0.6700. A break above this level would continue the previous bullish trend.
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