AUD – Stronger-than-expected July Inflation Supports Australian Dollar

Data released on Wednesday showed that Australia's July CPI unexpectedly rose to 3.5% year-on-year, higher than economists' expectations of 3.3%, indicating that inflationary pressures remain stubborn and skewed upward. The stronger-than-expected data confirms the Reserve Bank of Australia's recent meeting minutes' assessment of high inflation risks, and market attention will likely intensify again towards further policy tightening before the end of the year. Following the data release, the Australian dollar rose slightly, touching above 0.7180, its highest level since June.

Regarding the Australian dollar against the U.S. dollar, after recent gains, the exchange rate has moved away from the 100-day moving average. Having previously attempted to recover after breaking below this indicator in June, its current stability is expected to confirm further upward movement. The expected target is the 0.72 level, with the May 6 high of 0.7277 serving as another reference. The next key levels are expected to be 0.74 to 0.75. The support will be seen at the 0.71 level, which is the support of the upward trend line. A break below this level would likely invalidate the current upward trend. Stronger support levels below are expected at 0.7060 and the 50-day moving average at 0.70, with further support at 0.6940 and the 250-day moving average at 0.6870.

Forecasted range:
Resistance: 0.7200 – 0.7277 – 0.7400 – 0.7500
Support: 0.7100* - 0.7060 - 0.7000 - 0.6940 - 0.6870

This Week's News Highlights:
25/8 Reserve Bank of Australia's August meeting minutes reveal internal disagreements on interest rate hikes; several members believe further tightening may be needed.

26/8 Australia's July core consumer price index (CPI) month-on-month +0.5%
Australia's July trimmed mean CPI year-on-year +3.6%
Australia's July CPI year-on-year +3.5%, month-on-month +1.0%
 

Any questions? contact our professional analysis team