The Australian dollar is trading sideways, and the pair continues to hover near the symbolic 75 level. AUD / USD is currently trading at 0.7498, up 0.03% on the day.
Australia Core CPI higher than expected
Australian inflation for the third quarter did not much affect the Australian dollar but gave markets a lot to chew on. Title CPI rose 0.8%, matching expectations. The annual rate of headline inflation came in at 3.0%, against expectations of 3.1% and down from the Q2 gain of 3.7%. What mattered most was Core CPI, which was higher than expected. The annual rate came in at 2.1%, against expectations of 1.8%, and on a quarterly basis, the 0.7% print beat the 0.5% estimate. This means that core inflation has crept back into the RBA’s 2-3% inflation for the first time since 2015.
This will invariably raise speculation about the RBA’s rising rates in response to high inflation, but this may be a desirable thought. The RBA has previously stated that it will not raise rates until inflation is “sustainably” within its target range, and one high-core CPI reading as such does not seem to qualify. There is a wide gap between the RBA’s stance that rates will not happen before 2024, and the market perception that the central bank could raise rates in 2023. The RBA is holding a policy meeting on November 2, and it will be interesting to see. if the bank changes from its dovish attitude.
Meanwhile, Australian pre-final yields moved higher, which helped the Australian push into 75 territory. A hawkish tone from the RBA at next week’s meeting could give a boost to the Australian dollar.
AUD / USD Technique
- There is resistance at 0.7532, followed by the 200-SMA at 0.7560. Above, there is resistance at 0.7624
- We find support at 0.7382 and 0.7297