May 28, 2024 16:04 GMT
RBA Cited Risks to Inflation Could Post Upside Risks For AUDCAD
AUD
- Australian April CPI highlights the APAC docket on Wednesday and will be watched closely after the RBA revised up its Q2 forecast for both headline and core to 3.8% and cited upside risks to inflation in its most recent statement. Consensus currently sees headline CPI at 3.4% Y/Y. It is worth noting that the first month of the quarter doesn't include an update of the services components, which the RBA is particularly concerned about.
- In FX, last week’s move lower in AUDUSD appears to have been a correction and a bullish cycle that started Apr 19 still remains in play. The pair has recently breached a key short-term hurdle at 0.6668, the Mar 8 high, strengthening a bullish theme and a resumption of gains would open 0.6751, a Fibonacci retracement. On the downside, support to watch lies at 0.6581, the 50-day EMA.
- Interestingly, with a hawkish RBA and more dovish developments in Canada, AUDCAD remains within close proximity of the year’s highs at 0.9127 and exponential moving averages are in a bull mode position. Further strength might then expose a key medium-term resistance, a downtrend line from the 2021 and 2023 highs. This currently intersects around 0.9240 and will be monitored closely.
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