Audusd drops as Australian inflation expectations decline while US inflation data looms

AUDUSD Analysis

Performance after Wednesday
Period	Pct	Chg	Momentum
Wednesday	-0.37%	-25.1 Pips
Week to-date	-2.95%	-204 Pips
October	-2.92%	-201.9 Pips

Upcoming key events (London Time)

Thu 01:30 PM USD CPI Inflation Rate (12-mth)
Fri 01:30 PM USD Producer Price Index (12-mth)

What happened lately

In Australia, the October Survey of Consumer Inflationary Expectations indicates a decrease from 4.4% in September to 4% in October. This decline suggests that consumer expectations for inflation over the upcoming year are moderating. The reduction in expectations could imply a lessening of inflationary pressure in the economy, potentially influencing the Reserve Bank of Australia’s future monetary policy decisions. A decline in inflation expectations may lead to a more stable economic outlook, aiding in maintaining consumer purchasing power and influencing spending and saving behaviors.

Turning to the United States, significant upcoming economic events are set to impact the USD, with the Consumer Price Index (CPI) Inflation Rate data release on Thursday and the Producer Price Index (PPI) data on Friday. These reports are critical as they provide insights into inflation trends and cost pressures within the US economy. Higher-than-anticipated inflation rates could prompt increased speculation of further monetary tightening by the Federal Reserve, impacting market expectations and USD strength.

The Australian dollar experienced a depreciation against the US dollar, with AUDUSD dropping 0.37% to 0.67148 on Wednesday. The decline in consumer inflation expectations in Australia could suggest that the domestic outlook is becoming relatively more stable in terms of inflation, potentially easing some pressure on the AUD. However, economic data releases pending in the US, particularly around inflation indicators, are likely to play a pivotal role in AUDUSD movements. If US inflation reports come in stronger than expected, it might strengthen the USD further and push AUDUSD lower. Conversely, weaker inflation figures could soften the USD, providing support to the AUDUSD pair. Hence, traders and investors will closely monitor these developments to gauge currency pair dynamics as they unfold. The information is reported by Economic Recap.

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What can we expect from AUDUSD today?

AUDUSD on Wednesday dropped -0.37% to 0.67148. Price is below 9-Day EMA while Stochastic is falling.

Updated daily direction for AUDUSD looks bearish as the pair posted lower in Wednesday trading session.

Looking ahead for the day, immediate support level is at S1 0.66942 with break below could see further selling pressure towards S2 at 0.66736. To the upside, with the current momentum bearish, we prefer to look at breakout of the recent daily high of 0.67618 as a potential indicator of buying interest. Failure to break the resistance level would continue to echo bearish sentiment. A close below 0.67074 would indicate selling pressure.

For the week to-date, take note that AUDUSD is bearish as the pair posted lower by -2.95%.

Key levels to watch out:

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