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
Summary
Urgency
Analytic
Evgeny Klimov
Start trade
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

Bitcoin gathering strength for leap

FOMO — the fear of missing out — has been the main driver behind the BTC/USD rally. Regardless of how much is said about the US passing crypto-friendly legislation, capital

Marek Petkovich 13:27 2025-07-21 UTC+2

NZD/USD. Analysis and Forecast

Trade-related uncertainty continues to call for caution among traders with a bullish bias. At the start of the European session, the NZD/USD pair partially recovered its intraday losses. However

Irina Yanina 12:40 2025-07-21 UTC+2

Gold Resumes Its Uptrend

Gold rose at the opening of the Asian session on Monday as traders evaluated differing views among U.S. Federal Reserve officials on how President Donald Trump's tariff policy might affect

Jakub Novak 12:03 2025-07-21 UTC+2

No Consensus on Interest Rates Within the Federal Reserve

Judging by recent comments from several Federal Reserve officials, the committee has yet to reach a consensus on interest rate policy. While some members continue to stress the need

Jakub Novak 12:01 2025-07-21 UTC+2

The Euro May Get a Chance to Rise

Traders preparing for the upcoming European Central Bank meeting this Thursday, which will focus on setting interest rates, should also pay close attention to numerous economic reports this week

Jakub Novak 11:59 2025-07-21 UTC+2

Good news already priced in?

Not long ago, Donald Trump could send Wall Street into turmoil with a single social media post. Now, he is threatening to fire the Fed chair and remove the firewall

Marek Petkovich 09:13 2025-07-21 UTC+2

What to Pay Attention to on July 21? A Breakdown of Fundamental Events for Beginners

There are no macroeconomic reports scheduled for Monday. Therefore, weak market movements can be expected. Of course, Donald Trump could unexpectedly return to the spotlight at any moment with

Paolo Greco 04:01 2025-07-21 UTC+2

EUR/USD Weekly Preview: Tariff Saga, ECB Meeting, PMI and IFO Indices

The penultimate week of July lies ahead. We will learn the outcome of the next European Central Bank meeting as well as the July figures of key macroeconomic indicators. Additionally

Irina Manzenko 00:07 2025-07-21 UTC+2

U.S. Dollar. Weekly Preview

As mentioned in the two previous reviews, market movements next week will depend on the "four global themes." I previously stated that there might be no news on these themes

Chin Zhao 00:06 2025-07-21 UTC+2

British Pound. Weekly Preview

The fate of the British pound will also lie within the realm of the "four global themes": the standoff between Trump and Powell, new U.S. trade deals, Trump's new tariffs

Chin Zhao 00:06 2025-07-21 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.