A$ Recovers Post-CPI Losses But Underperforms G10, Trade Data Coming Up

AUDUSD ended Wednesday moderately higher at 0.6542 boosted by positive risk sentiment and Fed Chair Powell saying that easing “could be on the table as soon as September”. There was broad based G10 strength against the US dollar with the BBDXY index down 0.6% but Aussie underperformed as the lower-than-expected core CPI read removed expectations of the possibility of an August hike.

• AUDUSD is currently slightly higher at 0.6546. The pair fell to a low of 0.6480 later in Asian trading and oscillated around 65c for the European morning before trending higher to a peak of 0.6556 following Powell’s comments.
• A bear cycle remains in play for AUDUSD with support at 0.6576 broken opening up 0.6466. The short-term trend appears oversold though. Initial resistance is at 0.6583, July 25 high.
• With the BoJ hiking rates and tightening expectations for Australia diminishing, AUDJPY fell 1.7% to 98.14 after a low of 97.40, the lowest since mid-March.
• AUDNZD didn’t recover from its drop to 1.0968 following the Australian CPI. The pair is down 0.7% to 1.0994. It was around 1.106 before the data.
• AUDEUR is flat at around 0.6046 after a low of 0.5987. AUDGBP is slightly lower at 0.5091 after falling to 0.5048.
• Equities rallied with the S&P up 1.6% and Euro stoxx +0.7%. Oil prices jumped sharply with Brent up 4.4% to $81.54/bbl. Copper is 2.7% higher and iron ore is up to around $103/t.
• Today final July Judo Bank manufacturing PMI, June trade and Q2 trade price data print. The trade surplus is forecast to narrow to $5bn.