A$ Falls Sharply As US CPI Surprises & Equities Drop

The G10 were all lower against the US dollar following the higher-than-expected January US CPI data but Aussie was one of the underperformers as equities also sold off. AUDUSD dropped sharply to below 65c following the data which showed core steady at 3.9%. The pair is currently down 1.2% to 0.6453, close to the intraday low of 0.6443, while the USD index is 0.6% higher.

• Tuesday’s break below 65c strengthened the bearish theme in AUDUSD and confirmed the resumption of the downtrend. It broke initial resistance at 0.6453 and opened up 0.6412, a Fibonacci retracement. Key resistance is at 0.6625.
• After increasing to a high of 1.0693 during yesterday’s APAC session, AUDNZD is down to 1.0648. AUDJPY is 0.2% lower at 97.32, off the day’s low of 97.16. AUDEUR fell sharply following the US data and is now down 0.6% to 0.6026. AUDGBP fell 0.9% to 0.5126 as UK data also came in stronger than expected.
• Equities sold off with the S&P down 1.4% and the Euro stoxx -1.2%. Oil prices are up around a percent with WTI up 1.1% to $77.78/bbl. Copper is 0.4% lower and iron ore is around $128.50/t.
• There are no data or events in Australia today but RBA Governor Bullock is now scheduled to appear before the Senate economics committee on Thursday at 0900 AEDT.