A$ Tests 0.6800 Resistance Post CPI Beat, USD Pushes Higher Elsewhere

The A$ has outperformed so far in Wednesday trade, aided by a monthly CPI beat. The currency has been testing key resistance around the 0.6800 level The other majors, most notably yen, are down against the USD at this stage.

• The Australian July CPI eased further but not as much as the market expected (printing at 3.5% y/y, versus 3.4% forecast). The outcome is unlikely to impact RBA thinking, but Australian OIS and government bond yields were higher post the print.
• For AUD/USD a clean break would reinforce the bullish trend, with sights on 0.6839 the Jan 2 the next upside target.
• A$ gains have likely been curbed to a degree by weaker region equities, particularly in North East Asia, weighed by China tech earning headwinds. US equity futures are in the red, albeit up from session lows, as the market awaits earnings from tech bellwether Nvidia late in the US Wednesday time.
• AUD/JPY has fallen short of a fresh test of the 20-day EMA but is still up on the day, last near 98.15/20. NZD/USD is down a touch, last near 0.6245.
• USD/JPY has gravitated higher for much of the session, last near 144.45/50, around 0.35% weaker. BoJ Deputy Governor Himino spoke and didn't deviate dramatically away from what Ueda has said recently. The central bank must be vigilant to market volatility, but can adjust the degree of easing if certainty around the outlook firms.
• US yields have ticked a touch higher, which has likely lent some support to USD/JPY. EUR/USD is down around 0.20% to 1.1160. The BBDXY is up 0.15% to 1227.4.
• Looking ahead, the Fed’s Waller and Bostic speak. The data calendar is light with only euro area July M3 of note.