AUD/USD advances to test 0.7170 after Australian Inflation beats with 5.1%
|- AUD/USD has climbed above 0.7170 on higher-than-expected Australian inflation at 5.1%.
- This has raised the odds of a hawkish stance by the RBA in May.
- The DXY will likely display a consolidated move ahead after a decent upside move.
The AUD/USD pair has rebounded sharply as the Australian Bureau of Statistics has reported the quarterly Consumer Price Index (CPI) at 2.1%, higher than the market consensus of 1.7% and the prior print of 1.3%. The Reserve Bank of Australia (RBA), in its last monetary policy meeting in the first week of April, announced to be data-dependent for a rate hike decision.
The RBA dictated that its policymakers do not see any price pressures yet that could compel the central bank to march for an interest rate elevation. The yearly Australian inflation has landed at 5.1%, significantly higher than the forecast of 4.6% and the prior print of 3.5%. The figure of 5.1% looks sufficiently higher than the targeted inflation of 2%. Therefore, investors should brace for a hawkish stance from the RBA in May’s monetary policy announcement.
Meanwhile, the US dollar index (DXY) is steady at around 102.35 after a firmer rally. The fundamentals are not dictating any sign of reversal in the asset. However, profit-booking could drag the mighty DXY lower. Progressive expectations of a jumbo rate hike by the Federal Reserve (Fed) in May are advocating the likes of the DXY. The announcement by Fed chair Jerome Powell in his testimony at the International Monetary Fund (IMF) meeting that a 50 basis point (bps) interest rate hike is on the cards has already spoiled the suspense much, which has improved the appeal for the safe-haven assets.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.