AUD/USD: Aussie likely to remain supported by the global inflation gap – Commerzbank

FXStreet Insights Team FXStreet

The fact that the Australian inflation figures surprised to the downside on Wednesday went somewhat under the radar. Economists at Commerzbank analyze Aussie’s outlook after the Monthly Consumer Price Index (CPI) report.

RBA likely to have reached its interest rate peak in November

The RBA is likely to have reached its interest rate peak in November. It is unlikely to follow up with another hike when inflation is falling so much and people are suffering from higher mortgage rates. The market has therefore correctly priced out the remaining probability of another hike since the beginning of November. On the other hand, Wednesday's data also shows that rate cuts are unlikely to start any time soon.

If the RBA takes a similar view of the figures, it is likely to continue to emphasize its determination for the time being and to be skeptical about rate cuts in the near future. Only if inflation continues to fall significantly from February will rate cuts, as currently priced in by the market, look more realistic. Until then, the Aussie is likely to remain supported by the global inflation gap.

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FXStreet Insights Team

FXStreet

The FXStreet Insights Team is a group of journalists that handpicks selected market observations published by renowned experts. The content includes notes by commercial as well as additional insights by internal and external analysts.

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