Today's data showed that Headline CPI jumped 5.1% in the first quarter of 2022 (year-over-year), from 3.5% prior. The Trimmed Mean, which excludes large price rises and falls, rose to 3.7% year-over-year, the highest level since March 2009.
The Reserve Bank of Australia (RBA) is far behind is major counterparts in the monetary tightening path, but has been recently moving towards a more hawkish direction. In February it had concluded its asset purchases program, while in the last meeting in March, it had dropped the "patient" pledge.
Today's inflation figures support a more hawkish stance and we will have to see when the RBA will be ready to move on interest rates. The next monetary policy decision is due next week, ahead of Australian Federal Elections in late May.
AUD/USD moved to the offensive after today's data and tries to end its five-day losing streak. It now has the EMA100 (0.7230) in its crosshairs, but it will likely need fresh impetus to surpass it and look towards the 200Days EMA (0.7330).
Despite today's rally, the pair runs a poor month and its fifth straight losing week, with immediate risk on the downside, as long as it remains below the EMA100. Furthermore, the monetary policy differential between the Fed and the RBA remains unfavorable, while there are many risk factors that can weigh on sentiment.
As such, there is still risk of fresh monthly lows (0.7119), but those of 2022 (0.7032) are distant at this stage.
Senior Market Specialist
Nikos Tzabouras is a graduate of the Department of International & European Economic Studies at the Athens University of Economics and Business. He has a long time presence at FXCM, as he joined the company in 2011. He has served from multiple positions, but specializes in financial market analysis and commentary.
With his educational background in international relations, he emphasizes not only on Technical Analysis but also in Fundamental Analysis and Geopolitics – which have been having increasing impact on financial markets. He has longtime experience in market analysis and as a host of educational trading courses via online and in-person sessions and conferences.