AUD boosted by strong Aussie CPI

[MongiIG]

Far stronger than expected Australian mean CPI has given the AUD a lift against all other major global currencies. We look at the charts in the context of improved expectations for higher rates when the central bank next meets.

 Jeremy Naylor | Writer, London | Publication date: Wednesday 25 January 2023

Australian CPI

In Australia the headline consumer inflation (CPI) rose to a 33-year high last quarter, driven by a jump in travel and electricity costs.

The annual rate climbed to 7.8% from 7.3%. the highest since 1990 and more than twice the the growth of wages. The trimmed mean CPI, favoured by the Australian central bank, rose by 1.7% in the fourth quarter (Q4) down from 1.8% in the previous quarter. But that is higher than the market consensus of a 1.5% rise.

Now this revived the possibility of a Reserve Bank of Australia (RBA) rate hike next month. There has been a lot of discussion about the potential that we could well end up seeing the RBA stay as it was. But that's now unlikely.

Forex markets

Let's look at what's happening on the foreign exchange markets. The Aussie dollar is long trading with a big win for those that are long Aussie against pretty much every other single currency. Interestingly here we're at 7112, almost up at this line of resistance established back on the 11th of August last year, at 7136. That's gonna be an interesting number to break because the next price target then is 7283. Long on this with the stop underneath some of the other areas of support that we've seen.

AUD/NZD

Another big move that we've seen past resistance is the Aussie trading higher against the Kiwi. Another really big strong move. This is a Marubozu candle. We start at the bottom where we've got pretty much no sellers at 10961, and this beats that line of resistance. The next line to them to watch out for is the high that we had here back in 11th of November at 11046.

So money going into the AUD over the NZD and pretty much every other single currency.

AUD/JPY

This is against the Japanese yen. For example, a week of really strong gains for the Aussie, well past this line of prior resistance I had at 9114 which has now become support. So, that is also doing well.

AUD/EUR

Let's just take a look at a couple of other crosses. Look at this beating resistance against the euro as well. Now trading at 6520 for long on this too.

So you can put small trades on all these and at the moment at least you're winning right across the board against the Canadian dollar, but pretty much up against resistance at 9516 whichever way you cut it, money going into the Aussie on this midweek trading session.