Aussie punches above 75 line

The Australian dollar has posted gains on Tuesday. AUD/USD has pushed above the 75 line and is trading at 0.7510, up 0.26% on the day. The Australian dollar has been red hot in the month of October, surging 3.93%. The Aussie has benefited from improved risk appetite and the US dollar continues to stumble.

Australian CPI expected to ease

Australian CPI will be released on Wednesday, and the consensus for the third quarter stands at 3.1%, considerably lower than the Q2 reading of 3.7%. A reading within expectations would reinforce the view that the rise in inflation is transitory and would enable the RBA to maintain its current course for monetary policy. The RBA has signalled that it has no plans to raise interest rates prior to 2024. However, the markets have been more hawkish and have priced in a hike for mid-2022. There had been talk of the RBA changing its guidance on the rate outlook and taking a more hawkish stance, but so far that hasn’t happened. If the Q3 reading indicates that inflation is slowing, the central bank will feel less pressure to change course.

The US economy receives a key report card on Thursday, with the release of Advance GDP on Thursday. The consensus stands at 2.7% for the third quarter (QoQ), much weaker than the Q2 gain of 6.4%. This is the first of three GDP readings and is considered to have the most impact. Market participants will also be closely following the Core PCE Price Index, the Fed’s preferred inflation indicator. The estimate is expected to jump to 4.4% for September, up from 3.6% beforehand.

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AUD/USD Technical 

• The pair tested resistance at 0.7532 in the Asian session. Above, there is resistance at 0.7624
• 0.7476 is under pressure in support and could break later in the day. This is followed by 0.7328

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