- Annual CPI in Australia rises to 1.6% in second quarter.
- Positive headlines on US-China trade talks support antipodeans.
- FOMC is expected to announce a 25 basis points rate cut later today.
After closing the previous ten days in the negative territory, the AUD/USD pair gained traction and finally staged a decisive recovery boosted by the inflation data from Australia. With the market action turning subdued ahead of the day's key events, the pair is clinging to its daily gains a tad below the 0.69 mark, adding 0.35% on a daily basis.
Earlier today, the Australian Bureau of Statistics reported that inflation, as measured by the Consumer Price Index (CPI), rose to 0.6% on a quarterly basis in the second quarter after staying flat in the first quarter and improved to 1.6% on a yearly basis to beat the market expectation of 1.5%. With this data suggesting that the Reserve Bank of Australia could pause rate cuts to keep inflation under control helped the Aussie gather strength.
Moreover, several news outlets reported that sides had construction discussions in Tuesday's high-level US-China trade negotiations, reviving hopes of the trade conflict coming to an end and allowing trade-sensitive antipodeans to find demand.
Fed is set to cut policy rate by 25 basis points
Meanwhile, the US Dollar Index continues to move sideways in the upper half of this week's range above 98 while investors are gearing up for the FOMC's policy announcements. Previewing the event, "The market currently fully prices a 25bp cut and implies a 16% chance of a larger 50bp cut," said Deutsche Bank analysts. "Although the Fed have given no real encouragement to the notion of a 50bps cut it’s worth noting that the last time the Fed began a series of rate cuts, in September 2007, their opening move was a 50bp cut, and a similar 50bp cut happened when the Fed began cutting in January 2001.”
Technical levels to watch for
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. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
AUD/USD remains under pressure above 0.6400
AUD/USD managed to regain some composure and rebounded markedly from Tuesday’s YTD lows in the sub-0.6400 region ahead of the release of the Australian labour market report on Thursday.
EUR/USD faces decent contention around 1.0600
The knee-jerk in the Greenback reignited some buying interest in the risk complex and pushed EUR/USD to three-day highs near 1.0680, rapidly leaving behind the recent yearly low around 1.0600.
Gold eases despite risk-off mood
Gold trades in a relatively tight range near $2,390 in the second half of the day on Wednesday. In the absence of high-tier data releases, investors keep a close eye on headlines surrounding the Iran-Israel conflict.
Ethereum trades around the $3,000 support following a surge in validator queue
Ethereum (ETH) continued a sideways movement on Wednesday as investors seemed to be waiting for an upward or downward price catalyst. Despite the price stagnancy, the ETH validator queue - possibly fueled by the DeFi restaking boom - rose sharply.
Markets stabilize after Powell rules out rate hike, but the signs don’t look good
Markets are volatile right now; however, a relative calm has descended on the market and US. US stocks are down a touch, but the Vix is lower, US Treasury yields are lower, and the dollar is mostly lower vs. its G10 FX counterparts.