Australia CPI and China Manu. Flash PMI: Reaction
Australia CPI came in at 1.4% vs 0.9% expected, pushing AUD/USD back up to 1.30 before giving way. Bulls got another wind in their sails as strongest PMI from China in 3 months broke 1.03 support/resistance level, and price has maintained that position ever since.
On the hourly chart, we can see that price has recovered only to lead us back into the consolidation zone formed on Monday and most of Tuesday. If 1.03 is held once more, this will put 1.03 – 1.034 back into focus, while a failure to maintain 1.03 may be interpreted as a strong bearish sentiment in AUD/USD.
Taking a look at historical data, CPI was around current levels when RBA raised its benchmark rate. Should inflation continue to rise, we could see RBA choosing not to cut rate despite what market anticipates previously.
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