The Australian dollar continues to doze this week. Currently, AUD/USD is currently trading at 0.7626, up 0.04% on the day.
Business Conditions hits record high
With Australia’s economy close to pre-Covid levels, business conditions and confidence levels remain high. The NAB business survey in March reported that business conditions rose from 17 to 25, a record high. Business confidence slowed from 18 to 15, but remains well above its long-term average. The strong economic recovery has raised price pressures in recent months, which means that consumer inflation will be closely watched. Higher CPI would mean that the RBA will have to re-examine its dovish monetary stance, and could lead to a rate hike earlier than anticipated – the central bank has said that it does not plan to raise rates prior to 2024.
A major sore point in the country’s vaccine rollout. Australia had banked on the AstraZeneca vaccine for most of 26 million residents and had planned to vaccinate almost all by the end of 2021. However, with recommendations that people under 50 should not receive the AstraZeneca shot, the government has had to abandon this goal and is scrambling to find millions of Pfizer shots.
US CPI accelerates slightly
US consumer inflation edged higher in March, but not enough to have a significant impact on the currency markets. Headline CPI came in at 0.6%, up from 0.4%. Core CPI also improved, rising from 0.1% to 0.3%. These readings edged above the forecasts, but it’s unlikely that the numbers will make the Fed rethink its ultra-accommodative stance. Stronger inflation is another sign that the US recovery continues to gain traction, but the Fed will likely reiterate that the present level of QE is needed to buttress the US economy.
With AUD/USD continuing to range trade, weekly support and resistance levels are unchanged:
- AUD/USD faces resistance at 0.7668. Above, there is resistance at 0.7717
- 0.7579 is the first line of support. This is followed by support at 0.7539
For a look at all of today’s economic events, check out our economic calendar. www.marketpulse.com/economic-event
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