Aussie bounces on better than expected inflation data; Fed in focus
The Australian dollar bounced from new six-week low (0.6862) on Wednesday, boosted by better than expected inflation data.
Australia’s annualized CPI rose 1.6% in Q2 from 1.3% in Q1 and beating forecast at 1.5%, while monthly rise was 0.6% from 0.0% and 0.5% forecast.
Higher oil prices and weaker Aussie contributed to higher inflation.
Profit-taking after uninterrupted steep eight-day fall and deeply oversold daily stochastic suggest corrective action, however, overall bearish structure suggests limited recovery.
Former lows of 9/10 July (0.6920/10) mark solid barriers ahead of 0.6946 (Fibo 38.2% of 0.7082/0.6862), where upticks should be ideally capped to keep larger bears intact.
Sustained break higher would signal stronger correction and sideline immediate bears.
All eyes are on Fed rate decision, due later today, with 0.25% cut seen as done deal and focus on whether Fed will signal further policy easing in coming months that is expected to generate stronger direction signal.
Res: 0.6899; 0.6910; 0.6920; 0.6946
Sup: 0.6862; 0.6855; 0.6831; 0.6800