AUD – Australian Inflation Data Eases Pressure for Rate Hikes, AUD Struggles Around 0.70

The Australian Bureau of Statistics (ABS) released data on Wednesday showing that the August Consumer Price Index (CPI) rose 0.4% month-on-month, a significant slowdown from July's 1.0% increase and slightly below market expectations of 0.5%. Meanwhile, the year-on-year increase accelerated to 4.0% from 3.5% in July. The core cutoff mean rose only 0.2% month-on-month, below forecasts; its year-on-year increase remained stable at 3.6%, marking the third consecutive month of stability. Overall, the data eased pressure for further rate hikes in the short term; while the absolute level of inflation remains above the Reserve Bank of Australia's (RBA) target range of 2%-3%, the slowdown in monthly momentum provides breathing room for policy observation. Following the data release, the Australian dollar weakened, briefly dipping to 0.6958, its lowest level since July 30. The RBA had already raised the cash rate by 25 basis points to 4.6% on Tuesday, leaving clear room for further monetary tightening if necessary.

The Australian dollar against the US dollar, as seen in the technical chart, has fallen from a high of 0.7237 on September 9th and is currently below the 0.70 level, very close to the 0.618% Fibonacci retracement level of the previous rise. Coupled with the psychological support at 0.70, and with both the RSI and Stochastic Oscillator falling into oversold territory, the Australian dollar's decline may slow slightly in the short term. Stronger support is expected at 0.6950 and the 250-day moving average at 0.6920, with the key level at 0.68. Resistance is expected at 0.7050, with the next key level at the 50-day moving average at 0.7090. A return above this level would signal initial stabilization for the Australian dollar, followed by resistance at the 25-day moving average at 0.7130 and then 0.7240.

Estimated Volatility:
Resistance: 0.7050 - 0.7090 – 0.7130 – 0.7240
Support: 0.7000 - 0.6950 – 0.6920 – 0.6800

This Week's News Highlights:
29/9
RBA Raises Interest Rates by 25 Basis Points to 4.60%

30/9
Australia August Private Sector Lending YoY +8.4%
Australia August Private Sector Lending MoM +0.6%
Australia August Core Consumer Price Index (CPI) MoM +0.2%
Australia August Consumer Price Index (CPI) YoY +4.0%
Australia August Consumer Price Index (CPI) MoM +0.4%
Australia August Cut-off Mean CPI YoY +3.6%

Focus on:
Thursday
Australia September Manufacturing PMI (07:00)
Australia August Trade Balance (08:30)
 

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