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27/06/24
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AUD Rose as Inflation Expectations Came in Higher
At 12:55 p.m. (GMT) on June 27, AUD was recording some gains, with AUD/USD trading at 0.66676, representing a 0.3 percent increase. Inflation indicators released this week came in higher than anticipated, suggesting sticky inflation and that it may be difficult to take the inflation rate to the Reserve Bank of Australia’s inflation target of 2 percent to 3 percent.
On the same day, the Melbourne Institute Inflation Expectations moved from a 4.1% gain in May to 4.4% this month. On June 26, the Australian Bureau of Statistics (ABS) revealed that Australia’s CPI rose from April’s 3.6% to 4.0% last month, relative to a 3.8% forecast and representing the highest level in seven months.
Australia’s headline inflation has recorded an increase for three consecutive months, raising concerns that the Reserve Bank of Australia (RBA) will hike interest rates at its next meeting on August 6. The apex bank may be compelled to delay a rate cut until next year as attempts to tame inflation continue to stall badly.
The RBA has left rates unchanged at 4.35 percent for the seventh consecutive time and the past two meetings involved policy makers discussing the possibility of a rate hike. Markets look forward to the Q1 inflation report a week prior to the apex bank’s next meeting, as it will be an important factor in the rate decision. If there is no decline, the RBA may hike rates at the August meeting.
The U.S. final GDP for Q1 came in as expected at stands at 1.4%, relative to the previous 1.3%. A look at the chart of AUD/USD shows a visit to the barrier level at 0.6685 and there is another barrier level at 0.6729. There are two support levels on the downside, 0.6635 and 0.6591.
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