Overnight Australia releases lower CPI and GDP; aligns with daily AUDUSD chart
Hourly Chart
Source: www.tradingview.com
Overnight, Australian CPI y/y showed signs of moderation, printing at 7.4%, lower than the expected 8.1% and the previous 8.4%. GDP was also softer at 0.5% q/q - 0.8% q/q was expected. After the release, the spread between the AU and US 2-year notes declined (red rectangle). This suggests that the RBA is less hawkish than the Fed. Neverthelss, markets still expects the RBA to lift rates next week, even if the economy is slowing.
Daily Chart
Source: www.tradingview.com
The AUDUSD broke down from an ascending wedge in February. The AU-US 2-year spread was resilient and did not follow suit. It continued to trade in a potential flag pattern. A flag is a continuation pattern. The bias seems to be for a breakdown, however, the weak data overnight may provide that catalyst, almost three weeks after the AUDUSD breakdown.
This may be a case where the currency market is leading the fixed income market, but the two are aligning once again. More follow through is needed from bond market participants for confirmation.
Russell Shor
Senior Market Strategist
Russell Shor is a Senior Market Strategist at FXCM, having been promoted to the role in 2025 in recognition of his depth of insight and consistent delivery of high-impact market analysis. He originally joined FXCM in October 2017 as a Senior Market Specialist.
Russell holds an Honours Degree in Economics from the University of South Africa, is a certified FMVA®, and a full member of the Society of Technical Analysts (UK). With over 20 years of experience in financial markets, his work is renowned for its clarity, precision, and strategic value across asset classes.
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