AUD/USD Boosted by Sticky Australian Inflation, RBA Rate Hike Outlook
AUD/USD continues its upward trajectory following the release of higher-than-expected Q1 Australian CPI data, suggesting the Reserve Bank of Australia (RBA) is even less likely to cut interest rates in the near term.
Key Factors:
- Inflation Surprise: The stronger Q1 CPI data adds pressure on the RBA to maintain its current policy stance, fueling AUD gains as higher interest rates attract capital inflows.
- RBA Outlook Shifts: Analysts (Rabobank, TD Securities) now see the RBA's first rate cut delayed to November 2024 or even February 2025, providing long-term support for the AUD.
- US Dollar Influence: Societe Generale cautions that AUD/USD gains could be limited without a corresponding decline in US yields.
Technical Analysis: Signs of Bullish Reversal, But Risks Remain
- Reversal Potential: Recent price action shows potential bullish reversal signals, particularly on the 4-hour and daily charts.
- Conflicting Signals: The weekly chart suggests a bearish Measured Move pattern may still be in play, indicating potential downside risk.
- Confirmation Needed: Watch for confirmation of the longer-term trend based on the current week's close.
Analyst Outlook: Divided Opinions
- Rabobank: Favors continued AUD/USD gains throughout the year and into 2025.
- TD Securities: Scraps the November 2024 rate cut forecast, now expecting an initial cut only in February 2025, further supporting AUD gains.
- Societe Generale: Emphasizes the importance of US yields in driving AUD/USD direction.