AUD tracks sideways as all eyes turn to inflation update
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Daily Currency Update
The AUD was little changed through trade on Tuesday, tracking within a narrow range as investors eye key domestic and US inflation data. Having marked intraday lows near US$0.6520 through the afternoon of the local session the AUD edged higher overnight on the heels of softer-than-expected US consumer confidence data and durable goods orders and opened this morning above US$0.6540. Price action through the start of the week has been well-contained as investors await key inflation updates. Domestic CPI data today will prove key in guiding RBA policy. Year-on-year inflation surprisingly rose in January and we expect another print between 3.5% and 3.7%, well above the RBA preferred range of 2-3%. A hotter-than-expected print could add more pressure on the RBA to lift rates one last time, yet early-year inflation data is typically overweighed by goods and with services inflation proving stickier in recent months the RBA will likely want to look to more consolidated data through February and March before proffering any meaningful shift in policy outlook.Key Movers
Price Action across major currencies was muted through trade on Tuesday with the USD steady and the DXY index largely unchanged as the euro and GBP tracked within a narrow range. Investors appeared content in monitoring positions ahead of a slew of key headline macroeconomic items crowding the docket into the end of the week. The biggest news yesterday was Japanese CPI data. Inflation pressures rose across all three measures, ensuring both headline and core inflation printed above consensus lifting 2-year Japanese Government Bonds to their highest level since 2011 and nudging the yen higher against all major counterparts. Markets ignored a downside surprise in US core durable goods orders and consumer confidence data instead shifting attention to this week’s all-important PCE index update. The PCE deflator is the Fed’s preferred measure of inflation and with markets on edge after the hotter-than-anticipated CPI print earlier this month, we expect plenty of volatility following the print as markets adjust rate cut expectations.Expected Ranges
- AUD/USD: 0.6480 - 0.6600 ▲
- AUD/EUR: 0.5980 - 0.6080 ▲
- GBP/AUD: 1.9250 - 1.9500 ▼
- AUD/NZD: 1.0550 - 1.0650 ▲
- AUD/CAD: 0.8800 - 0.8900 ▲