Australian Dollar Strengthens After Better Than Expected Inflation Data

The Australian dollar climbed against its major counterparts in the Asian session on Wednesday, as the nation’s consumer price inflation rose at a faster-than-expected rate in the second quarter, raising hopes that the Reserve Bank of Australia will leave rates on hold at its meeting next week.

Data from the Australian Bureau of Statistics showed that consumer prices gained 0.6 percent on a quarterly basis in June quarter, after remaining unchanged in the preceding quarter. Economists had expected a 0.5 percent increase.

The consumer price index rose 1.6 percent year-on-year in second quarter, following a 1.3 percent increase in the previous quarter. Economists had expected a 1.5 percent rise.

Investors await the outcome of a two-day Federal Reserve meeting later today amid expectations the U.S. central bank will cut interest rates by a quarter point. It will be up to Chair Powell to steer market expectations for more rate cuts via the press conference.

The aussie rose to 0.6899 against the greenback and 74.89 against the yen, from its early 1-1/2-month low of 0.6862 and a 6-day low of 74.48, respectively. Next key resistance for the aussie is possibly seen around 0.70 against the greenback and 76.00 against the yen.

Reversing from its early more than 4-week low of 1.6248 against the euro and a 9-year low of 0.9017 against the loonie, the aussie bounced off to 1.6170 and 0.9065, respectively. On the upside, 1.60 and 0.93 are likely seen as the next resistance levels for the aussie against the euro and the loonie, respectively.

The aussie strengthened to a 2-week high of 1.0457 against the kiwi, from a 9-day low of 1.0386 seen at 8:15 pm ET. The aussie is poised to find resistance around the 1.06 level.

Looking ahead, German jobless rate for July, Eurozone jobless rate for June, final consumer inflation for July and GDP data for the second quarter are due in the European session.

U.S. ADP private payrolls data for July will be published at 8:15 am ET.

In the New York session, Canada GDP data for May and industrial product price index for June will be out.

At 2:00 pm ET, the Federal Reserve’s interest rate decision is slated for release. Economists widely expect the central bank to cut rates to 2.00 percent – 2.25 percent.

The material has been provided by InstaForex Company – www.instaforex.com

Source:: Australian Dollar Strengthens After Better Than Expected Inflation Data

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