Hovers Near Intraday Support

The greenback rose on Tuesday which saw AUD/USD pressured towards support at 0.7760, the pair bottomed out just above the level. Last trades at 0.7768. The declines in the pair came despite iron ore finishing the session in the green. In Singapore iron ore has retreated from highs, down around 1.18%. There is some concern around iron ore after Vale reported earnings, and said in the outlook that supply was likely to increase, while demand from China could wane as environmental concerns come into sharper focus.

• From a technical perspective a bullish price structure dominates following the recent break of a trendline resistance drawn off the Feb 25 high and a climb back above the neckline of a recent head and shoulders reversal pattern. Resistance is at 0.7816, Apr 20 high. A break would open 0.7849, the Mar 18 high. Key short-term support lies at 0.7719, a breach would be bearish.
• Domestic CPI data is the highlight on Wednesday, weekly payroll data and ABS prelim merchandise trade will also be released. CBA are positive on inflation figures: "We estimate a solid 1.1%/qtr increase in headline inflation (consensus: 0.9%/qtr). We also expect trimmed mean inflation to rise by 0.6%/qtr (consensus: 0.5%/qtr). AUD could benefit from favourable interest rate differentials if inflation surprises to the upside. As with other major economies, base effects will likely push Australian inflation above target in coming months. Nonetheless, the RBA will consider the lift to be transitory (in our view)."