Moving On Up

Weaker than expected core inflation figures in the US catalysed further losses in the greenback, which saw AUD/USD move to the highest level in a week. The pair last trades at 0.7730, down 5 pips on the session.

• Data earlier in the session showed March Consumer Inflation Expectations rose to 4.1% from 3.7%.
• From a technical perspective AUD/USD is consolidating but remains vulnerable following the sharp sell-off from 0.8007, Feb 25 high. Last week's move lower reinforced bearish conditions which saw prices fall through 0.7693, Feb 26 low. This signals scope for a stronger bear leg and opens 0.7564, Feb 2 low. Firm short-term resistance has been defined at 0.7838, high Mar 2 and 3. A break would alter the picture.
• Yesterday RBA Governor Lowe said he preferred a lower AUD, but that is was overvalued relative to fundamentals. "We estimate fair value for AUD/USD is now in a range of 0.77 to 0.89, centred on 0.83. Our mining commodities analyst recently upgraded our near‑term forecasts for commodity prices. As a result, we expect AUD/USD to appreciate and trade consistently above 0.8000 for the next few quarters, before easing below 0.8000 in 2022."
• There is no further local economic data on the locket until next week.