The AUD/USD pair rallied today as traders responded to strong inflation data from Australia.
Headline CPI rose 1.6% in the third quarter after falling 1.9% in Q3.
Furnishings and home products were the biggest contributors to the price increase.
The Australian dollar (AUD/USD) rose 0.10% as traders responded to relatively strong Australian inflation data. It is trading at 0.7136, which is in the same range as it has been recently.
AUD/USD rises after strong inflation
Australia returns to inflation
This year, Australia experienced its first recession in more than three decades due to the coronavirus pandemic. The disease has infected more than 27,000 people and killed nearly 1,000, which is an impressive achievement. In recent weeks, the country has managed to bring the second wave of the virus under control in Melbourne and Victoria.
And now the country’s consumer inflation has begun to recover. According to the Australian Bureau of Statistics, consumer prices rose by 1.6% in the second quarter. That was slightly higher than the 1.5% median estimated by a group of economists surveyed by Reuters. On a quarter-to-quarter basis, prices rose by 0.7% after falling by 0.3% in the second quarter.
It is noteworthy that the trimmed mean rose at an annualized rate of 1.2%, while the weighted mean increased by 1.3%. The weighted average is derived from the price changes of all components of the consumer price index, while the trimmed average is calculated using a “weighted average of the percentage change over the middle 70% of the distribution”.
According to the office, furniture and household products, transport and education were the main contributors to higher prices in Australia, with prices rising 12%, 3.4% and 2.1% respectively. Childcare in particular increased by 9% after the end of free childcare in July. The biggest laggards, however, were communications, health and food and soft drinks.
By region, consumer prices rose the most in Canberra and Brisbane, where they increased by 2.3%. The regions with the lowest inflation were Melbourne, Adelaide and Hobart.
Australia has three things in particular in its favor. First, the Chinese and East Asian economies have recovered. This is an important fact because of the volume of trade the country conducts with the region. Second, the country has almost won its battle against the Covid 19 pandemic. In recent days, it has reported fewer than 30 cases a day. And finally, commodity prices have risen, with copper and iron ore reaching multi-year highs.
Technical outlook AUD/USD
Technical Table AUD/USD
On the daily chart, we can see that the AUD/USD price has been moving sideways for the past several days. The price is slightly above the September low and below this year’s high of 0.7420. It also moves along the 25-day and 15-day exponential moving averages. It is also between the pivot point and the first support. As such, I expect the pair to stay within this range today, but in the longer term the trend will remain up. Start trading with our free currency rates.