Australian dollar hits new 2025 high, CPI looms

The Australian dollar is lower on Tuesday. In the European session, AUD/USD is trading at 0.6398, down 0.49% on the day.

Australia's inflation rate has been dropping and we'll get a look at first-quarter CPI on Wednesday. Annualized, inflation is expected to ease to 2.3% from 2.4% in Q4.

The Q4 gain of 2.4% was the lowest reading since Q1 2021, driven by government subsidies for electricity and fuel, which dampened goods inflation.

The RBA's trimmed mean CPI, a key core inflation gauge, is expected to drop to 2.9%, down from 3.2% in Q4 which was the lowest rate in three years. Core CPI remains well above the central bank's target of 2% but another decline will make a stronger case for a rate cut. The Reserve Bank of Australia left the cash rate unchanged at 4.10% and meets again in May.

The RBA is satisfied that inflation is moving lower but remains concerned about the unclear economic outlook, as US President Trump has zig-zagged in his tariff policy. Australia is particularly concerned that the high tariffs rates on China will chill China's economy, leading to less demand for Australian exports.

US employment data eyed

In the US, the focus will be on employment data in the second half of the week. JOLTS Job Openings, which will be released later today, is expected to ease to 7.48 million from 7.56 million. This would mark a second consecutive deceleration and point to a weakening labor market.

All eyes are on Friday's nonfarm payrolls, which surprised on the upside last month with a gain of 228 thousand, blowing past the forecast of 140 thousand. The markets are braced for a weak nonfarm payrolls release of 135 thousand.

AUD/USD Technical

• AUD/USD is testing support at 0.6412. Below, there is support at 0.6389
• There is resistance at 0.6456 and 0.6479