The Australian dollar is down -1.31% from last week as the market is not convinced that the Reserve Bank of Australia is done with its rate hikes. It saw a high of 0.6766 before ending the week at 0.6693.
The US initial jobless claims report saw a rise, but the numbers still remain at historically low levels. The number of Americans filing new claims for unemployment benefits increased moderately last week as well.
The Employment Cost Index for Q1 will be made public this week, and we expect it to increase slightly by 1.1%. Also to be released this week is the Consumer Confidence and Pending Home Sales for the month of April.
The Reserve Bank of Australia is going to release the Consumer Price Index this week. The data needs to return higher than expected for the AUD to be bullish. The RBA would then continue with its rate hikes in order to maintain its target inflation numbers. Lower than-expected numbers would mean that the AUD may see a rougher week ahead.
The Australian dollar faced a relatively stable week in terms of price volatility against the US dollar. During the last RBA meeting, they decided to temporarily pause the interest rate hikes, which is why analysts believe the market had no significant price volatility.
The commodity markets heavily influences the AUD market price. China’s GDP came out strong last week, which significantly helped boost the commodity markets as demand was up once again. The AUD markets benefit from increased demand for the top commodities.
Key support levels to look out for with the AUD/USD are 0.6700 and then further down to 0.6620. Moreover, key resistance levels are 0.6800 and further up to 0.6772.
The British Pound was very occupied last week, with big back-to-back data releases which included the CPI, employment data, retail sales, and PMI. However, this week it faces calmer waters, with only the house price index being the major data release.
The pound is potentially looking at overhead resistance if you look at it from a multi-month perspective. Price pressures remain significantly high due to inflation, and there is some weakness in the technical charts. Inflation failed to fall as expected. Meanwhile, the UK wage growth showed some improvement.
The rising inflation in the UK is expected to continue, as will the interest rate hikes. There continues to be a bullish outlook for the GBP/AUD in the short term, with potential overhead resistance at $1.88-1.89.
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