us dollar to aud

  • Economists expect core US inflation to have risen by 0.4% MoM in April, a dollar-supportive figure.
  • A repeat of March's 0.3% gain would sink the greenback on talk of "peak inflation."
  • Conversely, an increase of 0.5% in underlying prices would put a 75 bps rate hike firmly on the table.

Is that the peak over there? That question for mountain climbers resonates with investors, who are eager to see where inflation reaches its limits. The longer the fog continues, the longer the bloodbath in markets. For the dollar, it is a boon.

The greenback's next significant moves hinge on the Core Consumer Price Index (Core CPI) which is projected to have risen by 0.4% in April and 0.3% in March. That surprisingly low figure in the previous month fuels hopes for a lower read this time and a light at the end of the tunnel for stock traders. I will argue that this light is only a fleeting glimpse.

Why it matters

First, why is Core CPI more important than headline CPI? While Americans undoubte

The Forex Market Awaits Tomorrow's Fed Rate Hike Decisions

US dollar (USD) regains its losses. EUR/USD fell by 0.76%

Jeffrey Halley Jeffrey Halley 06.05.2022 10:25
US dollar rebounds on risk aversion The US dollar reversed higher, unwinding all its post-FOMC losses as risk aversion swept other asset markets and US 10-year yields rose and closed above 3.0%. Support at 102.50 held beautifully on a closing basis, signalling more US dollar gains ahead. The dollar index rose by 1.01% to 103.55 overnight gaining another 0.11% to 103.66 in Asia. Support at 102.50 remains intact with immediate resistance at a double top just ahead of 104.00. A close above 104.00 will signal rapid gains to 105.00 and in the bigger picture, the technical picture still says a multi-month rally to above 120.00 is possible.   EUR/USD fell by 0.76% to 1.0540 overnight, easing to 1.0530 in Asia. EUR/USD has nearby support at 1.0470 and resistance at 1.0650. Overall, the EUR/USD technical picture remains extremely bearish. It remains well below its multi-decade breakout at 1.0800, and only a weekly close above there would suggest the downtrend is over for now. Rallies above 1.0700 will remain hard to sustain with risks skewed to a resumption lower. A Russian retaliation to the EU oil embargo targeting natural gas exports would see EUR/USD move toward parity very quickly.   Sterling collapsed overnight after the Bank of England hiked rates by 0.25%, but signalled a UK recession next year, marking 2023 growth down to -0.25%. Combined with US dollar strength, GBP/USD fell by 2.21% to 1.2355, edging up to 1.2360 in Asia. GBP/USD has immediate resistance at 1.2400 and then 1.2635. The technical picture is very negative now and failure of the overnight low at 1.2325 will signal another selloff to 1.2200. In the months ahead, GBP/USD could well test its Brexit and then March 2020 lows.   Japan has returned from holidays today, with USD/JPY rising 0.84% to 131.15 overnight as US 10-year yields shot up through 3.0% once again. Today, USD/JPY has gained 0.30$ to 131.60, with the yen getting no solace from higher than expected Tokyo inflation data. With the Bank of Japan showing no signs of adjusting its 0.25% JGB yield cap, and US rates continuing to climb as the Fed gets busy fighting inflation, downside pressure on the yen seems inevitable. A rally by USD/JPY through 132.35 sets the stage for a move to the 135.00 area next week.   Asian currencies, including the offshore yuan, reversed the previous day’s gains plus interest overnight as the risk aversion wave by equities, and higher US yields, saw investors pile into US dollars. With China officials affirming their commitment to covid-zero, China’s growth fears are providing another headwind to regional currencies. With more and more central banks globally capitulating on inflation denial and moving to a rate hiking stance, pressure on Asian currencies is set to ramp up in the months ahead.   A stronger yuan fixing today by the PBOC has had no notable impact on either USD/CNH or USD/CNY. USD/CNH has powered through resistance at 6.7000, on its way to 6.7150 today. USD/CNY has risen to 6.6740. China authorities are showing no signs of concern about the fall of the yuan, and until they do, Asian regional currencies will remain under pressure from a stronger US dollar and diverging monetary policies. Despite the RBI rate hike, USD/INR is testing resistance at 76.60 today, USD/MYR has risen 0.60% to 4.3750 and still has 4.4500 written all over it. ​ Meanwhile, it looks like the central bank in South Korea and the Philippines are around on the topside of USD/KRW and USD/PHP. USD/SGD is testing 1.3900 this morning and failure could see the pair move towards 1.4100 next week.     This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.
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Skyrocketing US Dollar (USD) Can Be Even More Boosted! US CPI Preview: Hard core inflation to propel dollar to new highs, and two other scenarios

FXStreet News FXStreet News 10.05.2022 16:50
Economists expect core US inflation to have risen by 0.4% MoM in April, a dollar-supportive figure. A repeat of March's 0.3% gain would sink the greenback on talk of "peak inflation." Conversely, an increase of 0.5% in underlying prices would put a 75 bps rate hike firmly on the table. Is that the peak over there? That question for mountain climbers resonates with investors, who are eager to see where inflation reaches its limits. The longer the fog continues, the longer the bloodbath in markets. For the dollar, it is a boon. The greenback's next significant moves hinge on the Core Consumer Price Index (Core CPI) which is projected to have risen by 0.4% in April and 0.3% in March. That surprisingly low figure in the previous month fuels hopes for a lower read this time and a light at the end of the tunnel for stock traders. I will argue that this light is only a fleeting glimpse. Why it matters First, why is Core CPI more important than headline CPI? While Americans undoubtedly consume gasoline and food, these items' prices are volatile and the Federal Reserve has little impact on them. These are mostly supply-side issues driven by global forces such as Russia's war in Ukraine and OPEC+ petrol output. The dollar moves to the tune of the Fed's interest rates. What the Fed can significantly impact is demand – if it raises interest rates, consumers are motivated to save money rather than take loans to make big purchases. It has vowed to bring inflation down with higher borrowing costs – and it can afford to do so. The latest jobs report showed a tight labor market. Employment has room to climb down from the highs. Why are monthly figures more important than yearly ones in the upcoming release? In the upcoming annual calculation, April 2021 will be omitted to include changes seen in April 2022 – and that month was different. Stimulus bump: Source: FXStreet At this time last year, inflation jumped due to the one-off effects of the rapid reopening of the economy and stimulus checks, while April this year was already a normal month. Core CPI leaped by 0.9% in April 2021 and no economist expects a similar rise this time. That is why annual figures are set to fall significantly, putting the focus on monthly data. Expectations and reactions 1) Core CPI at 0.4% as expected: As I have mentioned, estimates stand at a 0.4% increase in Core CPI MoM and every tenth of a percent matters. This is the most likely scenario and is a dollar-positive one. The 0.4% estimate comes after economists had missed last month's figure by 0.2%, so they are likely more cautious this time around. On an annualized basis, it would reflect a rise of almost 5%, substantially above the Fed's 2% target. It would also be higher than the 0.3% level recorded in March and would label that figure as a one-off slow down in price rises. In other words, peak inflation would remain a mystery. At the time of writing, bond markets foresee a 95.9% chance of a 50 bps hike. That may change. Source: FXStreet For the dollar, it would extend the greenback's rise – give it a green light to move higher after the pause in recent days. This scenario has a high probability. 2) Core CPI at 0.3%, below expectations: This scenario is based on the fact that persistently high energy prices have left less money in Americans' pockets for other goods and services, alleviating price pressures. It is also backed by the slowdown in monthly Average Hourly Earnings for April– 0.3% vs. 0.4% expected – but these monthly changes are prone to revisions. March's wage figure was revised up. Nevertheless, if America records two consecutive months of 0.3% underlying inflation rises, it would strengthen the Fed's conviction of raising rates by only 50 bps in June, lowering the chances of a bigger 75 bps increase. That would hurt the dollar and this scenario has a medium probability. An even bigger downfall with 0.2% would already put "peak inflation" high on the agenda, but the chances are low. 3) Core CPI at 0.5%, above expectations: This figure beat estimates in three of the past six releases, so an upside surprise cannot be ruled out. I will stress again, that it is only a tenth of a percentage point, but one that can make a big difference in the dollar's direction. Latest Core CPI outcomes: Source: FXStreet Such an outcome could represent a catch-up in price rises after the relative slowdown or could be boosted by one-off factors. For the dollar, it would represent a considerable shot in the arm, propelling it higher. Bond vigilantes would begin circling around a 75 bps hike once again. This scenario has a lower probability. Final thoughts The Fed is focused on inflation, not employment, and every tick in underlying prices would have an outsized impact on markets. The base case scenario is of ongoing high inflation – an ongoing hawkish approach by the world's most powerful central bank – and a driver of further dollar gains.