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Australian inflation data could push AUD/USD’s rally higher

Mohamed Abdelhamid 24 January, 2023 7:40 pm Forex Market, Market Update

The AUD/USD pair broke decisively above 0.7000 yesterday. Australia’s Consumer Price Index data for Q4 could fuel the rally if figures come out sticky according to economists. The AUD/USD is trading at 0.7049 at the time of writing versus the previous closing at 0.7024.

Tuesday’s fourth-quarter CPI data in Australia will be crucial for the pair, as evidence of sticky inflation may force a hawkish repricing across the AUD curve (which currently embeds 40 bps of extra Reserve Bank of Australia tightening) and add steam to the AUD/USD rally.

CPI figures are released also in New Zealand and markets will observe a larger risk they could show a deceleration in price pressures compared to Australia. AUD/NZD may retest the recent 1.0950 highs soon as the NZD curve has more room for a dovish repricing.

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