Aussie poised for break out as markets turn to quarterly inflation report
Wednesday 27th July 2016
The Australian dollar rebounded strongly through trade on Tuesday breaking back through 0.75 U.S cents and touching intraday highs at 0.7541. Investors were buoyed by suggestions the Bank of Japan would fail to meet stimulus expectations and the AUD found support on demand for carry trades. Driving higher the AUD rally stalled on moves approaching 0.7545 as markets prepared for todays all important quarterly CPI print and FOMC rate statement. The quarterly inflation indicator is a critical marker in determining future RBA policy moves. A poor read will add credence to calls for an additional rate cut and could see the RBA board reduce rates as early as August. With the Aussie poised to break into a significant bearish channel todays print is extremely important in determining short term direction with supports at 0.7285 - 0.7300 to be tested should the data fail to fall within the target band.