Skip to content

CFDs are leveraged products. CFD trading may not be suitable for everyone and can result in losses that exceed your deposits, so please ensure that you fully understand the risks involved. CFDs are leveraged products. CFD trading may not be suitable for everyone and can result in losses that exceed your deposits, so please ensure that you fully understand the risks involved.

AUD/USD on thin ice ahead of inflation data

AUD/USD drops to a new low amid US higher rates and geopolitical tensions, with Australia's economy and China's recovery offering slight support. Focus turns to this week's inflation report.

Source: Getty

The AUD/USD has been on the back foot for most of 2024, and last week was no different as it recorded its lowest weekly close since November 2023 at .6433.

Economic and geopolitical waves impacting AUD/USD

Last week's decline came after Fed chair Jerome Powell acknowledged that the central bank would need to keep rates higher for longer to tackle sticky inflation, which boosted the US dollar. As did an escalation in Middle Eastern geopolitical tensions, which led to risk aversion flows.

Helping to keep the AUD/USD's head above water, the currency appears cheap when compared to surging commodities; and against the backdrop of a resilient Australian economy, and increasing signs of improvement in the Chinese economy.

This week's key local focus for the AUD/USD will be Wednesday's Q1 2024 inflation report. However, in this climate, it's debatable whether a firmer inflation print would benefit the beleaguered battler.

What is expected in Q1 2024 CPI report

Date: Wednesday, 24 April at 11.30am AEST

In December 2023 quarter (Q4), inflation rose by 0.6% for an annual rate of 4.1% YoY, below the 4.3% expected and well below the 5.4% print of the September quarter. The RBA's preferred measure of inflation, trimmed mean inflation, rose by 0.8% QoQ, which saw the annual measure of Trimmed Mean ease to 4.2% YoY, a significant drop down from 5.2% in the September quarter.

Michelle Marquardt, ABS head of prices statistics, said: "The CPI rose 0.6 per cent in the December quarter, lower than the 1.2 per cent rise in the September 2023 quarter. This was the smallest quarterly rise since the March 2021 quarter." The March 2024 quarter (Q1) is expected to show headline inflation increased by 0.8% QoQ, for an annual rate of 3.5%. The Trimmed Mean is expected to rise by 0.8% QoQ, allowing the annual trimmed mean to ease to 3.8% YoY.

This would be the slowest rate of Trimmed Mean inflation since March 2022; and in line with the RBA's implied forecast. However it is still too high for the RBA to consider rate cuts before August at the earliest.

AU annual headline inflation

Source: TradingEconomics

AUD/USD technical analysis

On the weekly chart, the AUD/USD continues to move sideways within a contracting multi-month bearish triangle. Downtrend resistance from the January 2023 .7158 high is currently at .6765ish. Uptrend support from the October 2022 .6170 low is at .6330ish.

AUD/USD weekly chart

Source: TradingView

Last week, the AUD/USD cascaded through several important support levels, including the year-to-date low of .6442, to print a fresh five-month low of .6362, just ahead of our weekly support at .6330ish.

The easing in geopolitical tensions over the weekend has supported a modest rally in the AUD/USD at the start of the new week, helping it to start working off oversold readings. To open up a stronger rebound to the 200-day moving average at .6530, the AUD/USD needs to clear short-term resistance at .6450/60ish.

A failure to do so would leave the AUD/USD in danger of breaking through critical support at .6350/30 towards .6270 and then the support provided by the October 2022 .6170 low.

AUD/USD daily chart

Source: TradingView
  • Source TradingView. The figures stated are as of 22 April 2024. Past performance is not a reliable indicator of future performance. This report does not contain and is not to be taken as containing any financial product advice or financial product recommendation.

IGA, may distribute information/research produced by its respective foreign affiliates within the IG Group of companies pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the research is distributed in Singapore to a person who is not an Accredited Investor, Expert Investor or an Institutional Investor, IGA accepts legal responsibility for the contents of the report to such persons only to the extent required by law. Singapore recipients should contact IGA at 6390 5118 for matters arising from, or in connection with the information distributed.

The information/research herein is prepared by IG Asia Pte Ltd (IGA) and its foreign affiliated companies (collectively known as the IG Group) and is intended for general circulation only. It does not take into account the specific investment objectives, financial situation, or particular needs of any particular person. You should take into account your specific investment objectives, financial situation, and particular needs before making a commitment to trade, including seeking advice from an independent financial adviser regarding the suitability of the investment, under a separate engagement, as you deem fit.

No representation or warranty is given as to the accuracy or completeness of this information. Consequently, any person acting on it does so entirely at their own risk. Please see important Research Disclaimer.

Please also note that the information does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. Any views and opinions expressed may be changed without an update.

Start trading forex today

Trade the largest and most volatile financial market in the world.

  • Spreads start at just 0.6 points on EUR/USD
  • Analyse market movements with our essential selection of charts
  • Speculate from a range of platforms, including on mobile

Live prices on most popular markets

  • Forex
  • Shares
  • Indices

Prices above are subject to our website terms and agreements. Prices are indicative only. All shares prices are delayed by at least 15 mins.

Prices above are subject to our website terms and agreements. Prices are indicative only. All shares prices are delayed by at least 20 mins.

The Momentum Report

Get the week’s momentum report sent directly to your inbox every Tuesday for FREE. The Week Ahead gives you a full calendar of upcoming key events to monitor in the coming week, as well as commentary and insight from our expert analysts on the major indices to watch.

For more info on how we might use your data, see our privacy notice and access policy and privacy webpage.

You might be interested in…

Find out what charges your trades could incur with our transparent fee structure.

Discover why so many clients choose us, and what makes us a world-leading provider of CFDs.

Stay on top of upcoming market-moving events with our customisable economic calendar.