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Aussie Hovers Above Two-Month Lows, CPI Report Takes Focus

AUD

All eyes are on Australia's quarterly CPI data today, expected to show further acceleration in the pace of price growth. Headline inflation is expected to have quickened to +4.6% Y/Y in Q1, with a key gauge of core price growth (CPI trimmed mean) seen printing at +3.4% Y/Y in breach of the RBA's target range.

  • Consumer price data come ahead of the release of Australia's terms of trade (Thursday) and factory-gate inflation (Friday).
  • AUD/USD has added a handful of pips this morning and last deals at $0.7132, moving away from Tuesday's two-month low of $0.7119.
  • Yesterday's losses came on the back of unfavourable risk backdrop, with China's Covid-19 situation and ongoing war in Eastern Europe undermined sentiment, despite the PBOC's pledge to increase support for the economy.
  • On the downside, the technical focus falls on $0.7095, which limited losses on Feb 24. A break here would give bears a green light for targeting Feb 4 low of $0.7052. Meanwhile, initial resistance is seen at Monday's high of $0.7261.

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