Aussie Q1 CPI missed estimates but AUD/JPY holds ground

Australia first quarter consumer price inflation (CPI) came in below estimates.
AUD holds ground as RBA's trimmed mean CPI bettered estimates.

Omkar Godbole FXStreet Contributor

Australia first quarter consumer price inflation came in at 0.4 percent quarter-on-quarter, missing the estimate of 0.5 percent and down from the previous quarter's print of 0.6 percent. The annualized figure remained unchanged at 1.9 percent.

The Reserve Bank of Australia's (RBA) trimmed mean CPI ticked higher to 1.9 percent year-on-year, beating the estimated figure of 1.8 percent. further, the trimmed mean measure rose to 0.5 percent quarter-on-quarter as expected.

Market reaction

A better-than-expected CPI trimmed mean reading seems to have saved the day for the Aussie bulls. currently, the AUD/JPY pair is reporting marginal gains at 82.71, having de defended the support at 82.50.
Meanwhile, the spread or difference between the 10-year Australia government bond yield and the Japanese government bond yield (also known as yield differential) stands at 280 basis points vs 281 basis points seen ahead of the data release.

Moving forward

The pair will likely remain better bid, courtesy of upbeat RBA's trimmed-mean CPI. However, the rising yield-led risk aversion in the equity markets could play spoilsport.

AUD/JPY Technical Levels

A move below 82.42 (Friday's low) would expose support lined up at 82.01 (March 7 low) and 81.49 (March 5 low). On the higher side, a close above 83.15 (April 20 high) would signal the pullback has ended and could allow a test of supply around 83.15 (April 19 high) and 84.08 (April 13 high).

Author

Omkar Godbole

FXStreet Contributor

Omkar Godbole, editor and analyst, joined FXStreet after four years as a research analyst at several Indian brokerage companies.

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