- Inflation in Australia fell to its lowest level in over three years in the third quarter.
- RBA rate cut bets fell to reflect the likelihood of a 24% cut in December.
- US consumer confidence rose more than expected.
AUD/USD price analysis supports the downtrend as easing price pressures in Australia put downward pressure on the Aussie. However, market participants rejected bets on a rate cut due to high core and services inflation. Meanwhile, the dollar remained steady after mixed economic numbers.
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Inflation in Australia eased to its lowest level in over three years in the third quarter, largely due to government electricity subsidies. CPI rose 0.2%, missing forecasts for a 0.3% rise. This caused an initial drop in the Australian dollar.
However, when traders had time to digest the report, it became clear that the headline figures showed inflation still high. Notably, the core CPI rose by 0.8%, above forecasts of 0.7%. Meanwhile, services inflation rose 4.6% after a 4.5% increase in the previous quarter. The Reserve Bank of Australia pays close attention to these figures.
Therefore, policymakers may remain cautious about rate cuts. Meanwhile, market bets fell to reflect a 24% chance of a cut in December and a 44% chance of a cut in February next year. Market participants fully determine the price of the first move only in April.
On the other hand, the dollar remained firm after data showed that consumer confidence rose more than expected. CB consumer confidence rose to 108.7, well above the estimate of 99.5. However, a separate report showed U.S. job vacancies fell to 7.44 million, missing forecasts of 7.98 million. The drop pointed to a slump in labor demand that firmed bets on a Fed rate cut in November.
AUD/USD key events today
- US ADP change in non-farm employment
- US GDP growth q/q
AUD/USD Price Technical Analysis: The downtrend is looking at the 0.6501 support level
From the technical side, AUD/USD the price is in a solid downtrend, with the price below the 30-SMA and the RSI near the oversold region. The price recently broke below the 0.6600 support level to make new lows in the downtrend.
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Given the solid bearish bias, AUD/USD could soon reach the 0.6501 support level. Furthermore, the downtrend will continue as long as the price remains below the SMA and the RSI trades in bearish territory below 50.
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