Snapshot: AUD/USD trades at 0.7139, down 0.41% on the session, after cooler-than-expected Australian CPI data. Monthly CPI eased to 0.4% versus a prior 1.1%, while annual CPI slowed to 4.2% from 4.6%, below the forecast of 4.4%. This has scaled back expectations for further RBA rate hikes.
- A break below 0.7124 (day’s low) could open the door to further downside.
- With crowded longs in AUD (98th percentile), watch for squeeze risk if the pair fails to rebound on any USD weakness.
Bias into NY: Bearish AUD/USD, targeting a move towards 0.7100. The softer CPI print has diminished the likelihood of an imminent RBA rate hike, as underscored by Sarah Hunter’s recent speech, putting downward pressure on the Aussie even as US 10Y yields hold around 4.468% and the DXY remains below 99.