The Australian dollar has been stuck against the 69 handle versus USD several times before and is now banging up against that level without success as we await the next CPI print from the Land of the Free (*conditions apply).
Overnight it again rejected resistance at that level, after last week zooming higher off the 67 cent level following a “soft” US jobs report:
But what if expectations of softer inflation numbers ahead don’t materialise?
From CMC:
The US consumer price index (CPI) reading for December, due out on 12 January, is expected to show that inflation continued to ease last month. Analysts estimate that consumer prices increased 6.5% in the year to December, down from 7.1% in November. On a monthly basis, CPI is expected to show no change versus November.
Meanwhile, so-called core CPI, which removes volatile food and fuel costs, is thought to have risen 5.7% year-on-year in December, down from 6% in November. Estimates also suggest that it rose 0.3% month-on-month.
If the CPI reading for December comes in cooler than expected, rates could fall and the dollar might weaken. That would likely lift stock prices. In contrast, a hotter-than-expected CPI print could push rates and the dollar higher, sending stock prices lower. Thursday’s CPI report is therefore very important as it will shape market expectations.
The daily chart shows a broad uptrend channel since the October 2022 bottoming out above the 60 cent level that has remained intact ever since. If the CPI print comes in as expected, this channel should continue to melt upwards, but a hotter print will likely see at best a return to the bottom edge of the channel around the 67 cent level or a break below to former resistance, now support at 66 cents:
