AUDUSD: still bullish?

Last night’s headline was the Australian CPI inflation falling – 0.2% quarterly (vs est. of+0.2%), which caused the AUD crosses to move against their bullish trend.

However this data is unlikely to shatter the dominant theme of rising inflation expectation with oil above $45 and stabilizing commodity prices, which support the Aussie dollar higher. While on one end China has seen improving economic data (positive for AUD), US data continued to show weakness with disappointing US durable goods yesterday. Tonight the Fed will probably want to keep the bearish momentum on the greenback going, at least until inflation really materializes.

The risk to the bullish AUD scenario, is that long AUD positioning is at the highest level since September 2014 according to CFTC data.

AUDUSD Daily – favour LONGS as long as 0.75 holds.

ANDREAS RUHLMANN
Premium Client Manager / Market Analyst