The Australian dollar is mixed today. AUD is currently making gains versus the Japanese yen, while selling off against the US dollar and the British pound. Yesterday, the currency sold off sharply, particularly against the US dollar. Following recent strength in the US dollar, the Australian dollar has been weakening alongside most commodity prices.
Turning to recent news and events, today's Australian inflation data was mixed. While headline inflation was below estimates, the RBA's preferred measure of inflation (trimmed mean figures) were ahead of expectations. Looking at reactions in AUD/USD, the pair initially sold off but has more recently made up most of its losses. Turning to speeches, the RBA's Kent repeated that the next move in interest rates was likely to be up. He also stated that the fall-out from interest-only mortgages was likely to be limited, as a large volume of such mortgages are set to expire in 2021. Our short-term outlook and medium-term outlook on the Australian dollar remains bearish.
AUD/USD is down slightly and trading just above 0.760. EUR/AUD is down and trading above 1.6020. GBP/AUD is down slightly and trading above 1.8310.
Turning to economic data and events from Australia this week, traders will be watching upcoming inflation figures. RBA Assistant Governor Kent downplayed fears regarding interest-only mortgages. The Q1 consumer price index (1.9% vs. 2.0% expected) was below expectations, while the RBA’s trimmed mean CPI (1.9% vs. 1.8% expected) was ahead of expectations. On Thursday, we’ll see the export and import price index for Q1. On Friday, we’ll see producer prices for Q1. Last week, changes in employment missed expectations.
As the Australian dollar runs out of steam, we are now bearish on the Australian dollar in the medium-term. Looking at a weekly chart, the Aussie is trading within normal conditions. Our analysis is based on various technical indicators.