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AUD/USD stays on the front-foot ahead of Aussie CPI, Fed rate decision

  • AUD/USD begins the key day with modest gains around a weekly high.
  • RBA Governor’s hawkish statement confronts recent doubts over the US-China trade meet in Chile.
  • Australia’s Q3 CPI becomes crucial for Asian traders amid a light economic calendar ahead of the European session.

Following its rise to be the winner of the day, the AUD/USD pair holds on to recovery gains while trading around 0.6865 amid the initial Asian session on Wednesday.

Even if doubts over the US-China trade meeting on November 17, mainly due to the geopolitical problems in Chile, recently keep the commodity-linked currencies under check, comments turning down the odds of negative rates by the RBA Governor helped the Aussie on Tuesday.

The Reserve Bank of Australia (RBA) Governor Philip Lowe’s appearance on Tuesday could be termed as a quite hawkish when the central banker noted that it’s extraordinarily unlikely that rates will go negative in Australia.

Also adding to the market’s risk-taking capacity is the Brexit positive headlines that have lately favored the British Prime Minister’s (PM) motion to call for an early election.

That said, the market’s risk-tone has been heavier off-late as the economic calendar shifts gears to the key data/events. Among them, third quarter (Q3) Consumer Price Index (CPI) and the RBA Trimmed Mean CPI will be of immediate interest while the preliminary reading of the Q3 Gross Domestic Product (GDP) and the Federal Reserve’s monetary policy meeting from the United States will be crucial afterward.

As a result, the US 10-year Treasury yields backstepped from the recent high of 1.85% to near 1.84% while Wall Street also closed on the downside despite heavy initial gains.

Although market forecast suggests a bit of soft price pressure in Australia supporting dovish monetary policy actions from the RBA, Westpac seems optimistic with its expectations of 0.6% CPI (versus 0.6% prior) on QoQ and 1.8% (versus 1.7% earlier) on YoY basis.

While an upbeat print could offer short-term gains to the Aussie amid trade-positive environment and following the recent comments from the RBA Chief, the price pressure still lacks the central bank’s target and could keep further easy money policy on the cards.

Technical Analysis

Unless breaking the 0.6884/95 area including September/October month high, prices bear the risk of a pullback to 50-day Exponential Moving Average (EMA) level of 0.6812.

Author

Anil Panchal

Anil Panchal

FXStreet

Anil Panchal has nearly 15 years of experience in tracking financial markets. With a keen interest in macroeconomics, Anil aptly tracks global news/updates and stays well-informed about the global financial moves and their implications.

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