Via Westpac on the Australian dollar after the US CPI data on Thursday:
As previously noted, the bias for AUD/USD to rise has been partly due to
AU domestic and RBA’s tilt to a more hawkish hold, as well as potential
that US is returning to a path of disinflation. June CPI puts this
prospect firmly in play. After Fed Chair Powell had made it clear that
the Fed needed to gain more confidence from further data releases, the
CPI fall of -0.1%m/m and back to 3.0%y/y (core 3.3%y/y) was perfectly on
cue. Sharp moves lower in US yields fell as much as -17bps
(short-dated) with 10yr yields -13bps underscore the shift in market
pricing and perceptions. AUD/USD continues to drive towards an interim
target of 0.6820 within potential moves to retest 0.6870 (Dec. 2023
high) or even 0.6925. Critical will be that any pullbacks are contained
(0.6705-15 remaining a pivot zone).
This article was written by Eamonn Sheridan at www.forexlive.com.
