- Australian inflation rose by 2.1% in October, below estimates of 2.3%.
- The likelihood of an RBA rate cut in December remained low at 14%.
- All eyes are on the upcoming US GDP and inflation figures.
The AUD/USD forecast shows a resilient Aussie despite downbeat Australian inflation data. Meanwhile, the greenback eased slightly as markets awaited key economic figures from the US for clues of future Fed policy moves.
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Australia released its CPI report on Wednesday, showing inflation rose by 2.1% in October, below estimates of a 2.3% increase. However, it held steady from the previous month when inflation also increased by 2.3%. Meanwhile, core inflation increased by 3.5% after a 3.2% increase in the previous month.
The mixed report had little impact on Reserve Bank of Australia rate cut bets. As a result, the Aussie barely reacted. The likelihood of a rate cut in December remained low at 14% while that of February was at 27%. Market participants are only fully pricing the first rate cut in May next year. Policymakers have said they need more evidence inflation is declining to consider lowering borrowing costs.
On the other hand, the dollar paused after rallying in the previous session due to Trump’s promise to impose tariffs on goods from China and Canada. Such an outcome will brighten the outlook for the US economy in the long term.
However, tariff optimism eased as markets returned their focus to US economic data. All eyes are on the upcoming GDP and inflation figures. Economists believe the economy will expand by 2.8%. Meanwhile, they expect inflation to increase by 0.3%. The actual figures will shape the outlook for the Fed’s December meeting.
AUD/USD key events today
- US Prelim GDP q/q
- US unemployment claims
- US core PCE price index m/m
AUD/USD technical forecast: Consolidation phase
On the technical side, the AUD/USD price has rebounded after failing to breach the 0.6450 support level. However, it still trades below the 30-SMA, showing bears remain in charge. Moreover, the RSI trades slightly below 50 in bearish territory.
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However, there is a chance the price will soon break above the 30-SMA since it has been trading in a range between the 0.6450 support and the 0.6550 resistance. Within this range, the price has chopped through the SMA with no clear direction. If it breaks above, it will likely retest the range resistance. Otherwise, bears will make another attempt at the range support.
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