Consumer inflation in Australia rose in April, countering the expected downward trend. Prices increased by 3.6% year-on-year, up from 3.5%, while the average expectation was a decrease to 3.4%.
FxPro Senior Analyst Alex Kuptsikevich noted: Inflation stabilized at the end of last year, dropping to 3.4%, but has been rising over the past two months. Prices have increased in 10 of the past 12 months. The consecutive rate hikes over the past four months have dispelled concerns about imminent rate cuts.
From the reaction of the foreign exchange market, traders were not prepared for the policy tightening. As the price attempts to break through 0.6650, the Australian dollar faces stronger selling pressure against the U.S. dollar. The recent rise in industrial metal prices and the trade recovery with China present interesting trends.
If the AUD can break through the multi-month resistance level of 0.6650, it will open up a path to 0.6800, a key level over the past 12 months. The current weakness in the foreign exchange market, combined with potentially bullish data, is also contributing to domestic pressure.
However, from a bearish perspective, retail sales remain weak, with retail sales rising 0.1% month-on-month in April and 1.3% year-on-year.
