Top.Mail.Ru
empty
30.04.2025 01:03 PM
Stable Inflation to Support the Australian Dollar

Inflation in Australia remained steady at 2.4% year-over-year in Q1, defying expectations of a slight slowdown to 2.2%. The quarterly increase of 0.9% also exceeded forecasts, while core inflation slowed from 3.3% to 2.9%, which can be seen as significant progress as it entered the Reserve Bank of Australia's (RBA) target range of 2–3%.

This image is no longer relevant

toward normalization, cutting the rate from 4.35% to 4.10%.

There's no need for haste, as the economy remains resilient. At its February meeting, the RBA expressed confidence in accelerating economic growth and a robust labor market. However, this was before the world learned about the U.S. announcement of a "Liberation Day" and the heightened global uncertainty that followed.

Currently, interest rate forecasts suggest the next rate cut could come as early as the May 20 meeting, followed by two more reductions before the end of the year. This is a fairly moderate pace that would help maintain high yield appeal, which in turn should prevent a sharp drop in the Australian dollar — even in the event of a global downturn.

In contrast, uncertainty surrounding the U.S. economy continues to grow. Today, the initial estimate for Q1 GDP will be released, showing how the economy responded during the first 100 days of President Trump's second term. The consensus forecast calls for a 0.8% year-over-year increase, but the Atlanta Fed's GDPNow model paints a much bleaker picture: a 2.7% contraction — potentially making this the worst quarter since mid-2020.

The market's response will depend on which projection is closer to reality. Any positive reading would likely be viewed as neutral, but if the data aligns with the GDPNow forecast, it will almost certainly trigger a wave of dollar selling, a drop in equity indices, and increased demand for bonds. In that case, the Australian dollar will most likely move in sync with broader market sentiment, as local data will take a back seat — or even a third-row seat — in terms of relevance.

This image is no longer relevant

Market Positioning and Outlook

The net short position on AUD narrowed by $259 million during the reporting week, to –$3.48 billion. Despite the increase in the estimated fair value and AUD's attempts to strengthen against the U.S. dollar, overall speculative positioning remains bearish, suggesting weak prospects for a sustained bullish trend.

Nonetheless, in the short term, AUD/USD is expected to continue attempting upward movement, with the pair consolidating near the resistance zone at 0.6410/30. A bullish breakout appears more likely than a pullback to one of the support levels at 0.6320 or 0.6245, with an upward target of 0.6540/60.

Kuvat Raharjo,
Analytical expert of InstaForex
© 2007-2025
Select timeframe
5
min
15
min
30
min
1
hour
4
hours
1
day
1
week
Earn on cryptocurrency rate changes with InstaForex
Download MetaTrader 4 and open your first trade
  • Grand Choice
    Contest by
    InstaForex
    InstaForex always strives to help you
    fulfill your biggest dreams.
    JOIN CONTEST

Recommended Stories

USD/JPY. Analysis and Forecast

The USD/JPY pair is holding above the key 144.00 level amid continued weakness in the U.S. dollar. Strong household spending data released today in Japan has strengthened expectations

Irina Yanina 18:12 2025-07-04 UTC+2

NZD/USD. Analysis and Forecast

The NZD/USD currency pair is recovering after bouncing from the 0.6030 level, which marks a weekly low, and is attempting to gain further positive momentum. This suggests a break

Irina Yanina 18:08 2025-07-04 UTC+2

USD/CAD. Analysis and Forecast

On Friday, the USD/CAD pair remains near a three-week low, trading below the key 1.3600 level. The U.S. dollar is struggling to extend its gains following yesterday's stronger-than-expected Nonfarm Payrolls

Irina Yanina 17:59 2025-07-04 UTC+2

The Market Celebrates a Victory

Financial markets responded positively to the release of U.S. employment statistics for June. Payrolls rose by 143,000, exceeding Bloomberg analysts' forecasts. April and May figures were revised upward

Marek Petkovich 10:15 2025-07-04 UTC+2

Next Week May Begin on a Positive Note for the Markets (Possible Resumption of Growth in #SPX and #NDX)

The U.S. labor market data, published by the Department of Labor, instilled cautious optimism among investors, extending the rally in U.S. equity markets, supporting the dollar, and weakening gold prices

Pati Gani 10:09 2025-07-04 UTC+2

The Market is Preparing for Another Shock

Just yesterday, U.S. President Donald Trump announced that his administration would begin sending letters to trade partners on Friday, outlining unilateral tariff rates that, according to him, countries will

Jakub Novak 09:55 2025-07-04 UTC+2

Strong U.S. Employment Report Exceeds All Expectations

The U.S. dollar surged against a range of risk assets as the key figures in June's employment report convinced the Federal Reserve that there is no need to lower interest

Jakub Novak 09:49 2025-07-04 UTC+2

What to Pay Attention to on July 4? A Breakdown of Fundamental Events for Beginners

No macroeconomic reports are scheduled for Friday. As previously mentioned, today is a public holiday in the United States, known as Independence Day. All banks and stock exchanges will

Paolo Greco 07:59 2025-07-04 UTC+2

GBP/USD Overview – July 4: Reeves Cried — Did the Pound Collapse?

The GBP/USD currency pair also traded fairly calmly throughout Thursday until the start of the U.S. trading session. Recall that a day earlier, the British currency had plummeted by nearly

Paolo Greco 03:56 2025-07-04 UTC+2

EUR/USD Overview – July 4: Trump's Third Trade Deal Didn't Help the Dollar Either

The EUR/USD currency pair traded very calmly throughout Thursday, until unemployment and labor market reports were released in the United States. However, we will discuss those reports in other articles

Paolo Greco 03:56 2025-07-04 UTC+2
Can't speak right now?
Ask your question in the chat.
Widget callback
 

Dear visitor,

Your IP address shows that you are currently located in the USA. If you are a resident of the United States, you are prohibited from using the services of InstaFintech Group including online trading, online transfers, deposit/withdrawal of funds, etc.

If you think you are seeing this message by mistake and your location is not the US, kindly proceed to the website. Otherwise, you must leave the website in order to comply with government restrictions.

Why does your IP address show your location as the USA?

  • - you are using a VPN provided by a hosting company based in the United States;
  • - your IP does not have proper WHOIS records;
  • - an error occurred in the WHOIS geolocation database.

Please confirm whether you are a US resident or not by clicking the relevant button below. If you choose the wrong option, being a US resident, you will not be able to open an account with InstaForex anyway.

We are sorry for any inconvenience caused by this message.