The Australian dollar has extended its gains on Tuesday. In the European session, AUD/USD is trading at 0.6557, up 0.26%. On today’s data calendar, the US will release two tier-1 events. Durable goods orders are expected to rebound with a 1.1% gain in February, after a 6.1% slide in January. The Consumer Board consumer confidence index is expected to tick up to 107 in February, up from 106.7 in January.
Australian CPI expected to rise slightly in February
Australia’s inflation rate is expected to creep up in the February report, which will be released on Wednesday. The market estimate stands at 3.4% y/y for February, compared to 3.4% in January.
That could set back expectations for a rate cut from the Reserve Bank of Australia, which has kept rates unchanged at 4.35% for four straight times. The markets are of the view that the RBA’s tightening cycle is done and have priced in a rate cut later in the year. Still, the RBA hasn’t ruled out rate hikes, with inflation still well above the 2% target.
The central bank needs to be sure that once inflation reaches the target, it can be sustained at that level and is likely to be very cautious before shifting policy and cutting rates. The RBA doesn’t meet until May and barring a huge surprise will again keep rates unchanged.
Australia’s Westpac consumer confidence declined 1.8% in March to 84.4, worse than the market estimate of -1.6%. The index has been below 100 since February 2022, indicative of prolonged pessimism about the economy. Consumer confidence took a hit after the 6.2% gain in February, as frustrated consumers didn’t see any signs of a rate cut at the RBA’s meeting earlier this month.
AUD/USD Technical
AUD/USD is testing resistance at 0.6551. Above, there is resistance at 0.6598
There is support at 0.6467 and 0.6420
