The Australian Dollar (AUD) is up 0.22% at around 0.7175 against the US Dollar (USD) during the European trading session on Friday. The Aussie pair recovers strongly after a significant fall the previous day, driven by a significant jump in the US Dollar, following strong United States (US) Producer Price Index (PPI) data for August.
The data showed on Thursday that headline producer inflation accelerated at a faster-than-expected pace to 5.3% Year-on-Year (YoY). The core PPI – which excludes volatile food and energy items – grew by 4.6%, as expected.
A hot US PPI report prompted hawkish Fed expectations ahead of the Consumer Price Index (CPI) data for August, releasing at 12:30 GMT.
On the Aussie front, financial markets seem confident that the Reserve Bank of Australia (RBA) will raise interest rates again this year, following warnings of upside inflation risks from Deputy Governor Andrew Hauser on Tuesday.
Analysts at Rabobank highlight that the RBA’s policy tone has shifted after “Hauser [gave] a hawkish speech, which has markets thinking of hikes this month and in November.”
AUD/USD Technical Analysis
AUD/USD trades at 0.7174, holding a constructive bullish tone as it remains above the 20-day exponential moving average (EMA) at 0.7159.
The formation of a positive divergence between the price and the Relative Strength Index (RSI) has set a strong recovery.
On the downside, immediate support is seen at the 20-day EMA around 0.7160, followed by 0.7100. Looking up, the pair aims to revisit the four-year high near 0.7280.
(The technical analysis of this story was written with the help of an AI tool. Know more.)
Economic Indicator
Consumer Price Index (YoY)
Inflationary or deflationary tendencies are measured by periodically summing the prices of a basket of representative goods and services and presenting the data as The Consumer Price Index (CPI). CPI data is compiled on a monthly basis and released by the US Department of Labor Statistics. The YoY reading compares the prices of goods in the reference month to the same month a year earlier.The CPI is a key indicator to measure inflation and changes in purchasing trends. Generally speaking, a high reading is seen as bullish for the US Dollar (USD), while a low reading is seen as bearish.
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