- AUD/USD accepts quotes to fresh session lows, snapping a two-day uptrend on weak Australian inflation data.
- Australia’s monthly CPI in February fell to 6.8% YoY, lower than the expected 7.1% and previous 7.4%.
- Sentiment remains upbeat despite mixed concerns over the next move by major central banks.
AUD/USD fell 20 pips to 0.6690 as Australian inflation disappointed early Wednesday. In doing so, the risk barometer has risen for two straight days. That said, Australia’s monthly consumer price index fell to 6.8% in February from 7.1% YoY, vs. 7.4% expected. With the latest inflation data slumping, another 0.25 percent chance of a rate hike from the Reserve Bank of Australia (RBA) becomes unaffected Welcoming and flooding the AUD/USD price, especially after the poor performance of Australian retail sales. ALSO READ: Australian CPI falls short of expectationsa AUD dips below 0.6700 Contrary to the pessimistic data, the firmer risk profile suggests that AUD/USD is still at the lower end even though it is down by press time. Also tracking key catalysts for latest risk appetite Market sentiment, fading fears of banking crisis and less aggressive interest rate hikes by top central banks The hope seems to have caught the market’s attention. Also keeping traders positive were rumors that a possible recession in some developed countries would be less severe than initially expected. On the contrary, according to Reuters, an official in the Australian Treasurer’s office said on Tuesday that sources said that Australian Treasurer Jim Cha Moss will convene a meeting of the country’s top financial regulator to examine how the latest volatility in global financial markets may affect the country, fueling optimism. Deutsche Bank’s controversial $5.4 million credit default swap (CDS) deal was similar. Additionally, financial market regulators in the US and Europe have also shown an aversion to market containment and have recently raised concerns. U.S. Treasury yields struggled to extend a two-day rally in these games, but S&P 500 futures were last modestly higher. AUD/USD pair traders should focus on secondary housing data for fresh impetus amid initial reaction to Australian inflation data. More important, however, are the headlines surrounding the health of the global banking sector and easing fears of further rate hikes by top central banks.
AUD/USD broke above the 21-day exponential moving average (EMA) for the first time, around 0.6700 at press time, leading buyers towards the confluence of the 50-day EMA and the previous week’s high around 0.6755-60.