Finds Support After Plunge

A stronger greenback after firmer than expected CPI numbers saw AUD/USD fall on Wednesday, the pair eventually fell to 0.7720. Last on the screens at 0.7732, up 7 pips in early trade.

On the coronavirus front Australia has reportedly entered a pact with Moderna to receive 25m doses of vaccine with 10m doses to be delivered in 2021 and a further 15m doses of booster vaccines in 2022. In a sign of normalcy returning NSW is set to start accepting overseas students within months.

• CBA sees AUD coming under pressure in the near term, but rising towards its 0.80 target by the end of Q2: "Most AUD crosses continued to underperform too because of trade tensions between Australia and China. The Hong Kong‑based newspaper, the South China Morning Post, reports the Chinese government is seeking to divert more of its imports of gas from Australia to Turkmenistan. Turkmenistan is the largest supplier of natural gas to China thanks to a pipeline funded by the Belt and Road Initiative. The news about gas may push AUD lower closer to 0.7700 this week. We interpret such a fall in AUD as a bump in the road on its way to 0.8000 by quarter end."
• From a technical perspective AUD/USD traded higher Monday but stalled at the session high and has since pulled back. The pair hit new weekly lows post-US CPI. A bullish outlook remains intact though. The pair has recently cleared the April highs and this opens the 76.4% retracement of the February - April downtick at 0.7895. A break here would strengthen bullish conditions and point the needle toward the year's best levels printed in late February at 0.8007.
• Another thin economic docket, May Consumer Inflation Expectations is due at 0200BST/1100AEST.