Snapshot: AUD/USD trades at 0.6894, down 0.39% on the day, as traders brace for a crucial domestic CPI print. The Reserve Bank of Australia remains firmly in a hawkish hold, signalling readiness to hike further if inflation pressures persist, making today’s inflation data the primary driver for the Aussie.
- The RBA’s hawkish hold, with CPI above target and explicit optionality to hike, underpins a structural bid for AUD on any signs of sticky inflation.
- Watch for any significant deviation in the Australian CPI figures from forecasts, particularly the trimmed mean, which could trigger a sharp repricing in RBA rate hike expectations and AUD direction.
Bias into NY: The bias remains tilted towards upside risk for AUD/USD should the domestic CPI print surprise to the upside, reinforcing the RBA’s hawkish stance and potentially forcing short-covering. A print below expectations, however, would expose the pair to further downside, especially given the current modest net short positioning.