AUD/USD advances to test 0.7170 after Australian Inflation beats with 5.1%

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.