AUDUSD holds bullish channel as inflation remains elevated

  • AUDUSD
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Australian headline inflation printed at 7.3% y/y. This was higher than the expected 7.2% y/y and more than the last months 6.9% y/y. After two months of declines, food prices pushed higher. Poor weather was much to blame and is largely reflected in the increase in fruit and vegetable prices. Motor fuel was another larger contributor up 5.6% m/m (it was also up 7% m/m for October).

However, a peak in inflation may be in sight. Clothing prices, a discretionary item, were down 2.4% for the month and housing showed a sparse increase of 0.1% m/m, with rents only at a 0.2% m/m increase for November (this is down from 0.6% in October).

The AUDUSD trades in its daily bull channel between the upper blue and red bands. The longer it stays in this area, the greater the likelihood of further price appreciation. This is supported by momentum, as per its RSI, which trades above 50 (green rectangle). Again, the longer this area is maintained, the greater the chances of higher prices.

Russell Shor

Senior Market Specialist

Russell Shor joined FXCM in October 2017 as a Senior Market Specialist. He is a certified FMVA® and has an Honours Degree in Economics from the University of South Africa. Russell is a full member of the Society of Technical Analysts in the United Kingdom. With over 20 years of financial markets experience, his analysis is of a high standard and quality.

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