The Australian dollar has three consecutive positives against the US dollar, but the bulls are bound by one factor
On October 27th, the Australian dollar rose against the US dollar for the third consecutive trading day, once setting a new high this week. The Australian CPI announced during the day is in line with the quarterly forecast, but the revised average CPI by the Reserve Bank of Australia is biased towards the bulls. Market sentiment is still mixed. The Australian dollar against the US dollar still has good buying near the intraday high of 0.7536. However, the market may avoid big bets before the third quarter GDP data is released.

On Wednesday (October 27), the Australian dollar rose against the US dollar for the third consecutive trading day, once setting a new high of this week. The Australian CPI announced during the day is in line with the quarterly forecast, but the revised average CPI by the Reserve Bank of Australia is biased towards the bulls. Market sentiment is still mixed. The Australian dollar against the US dollar still has good buying near the intraday high of 0.7536. However, the market may avoid big bets before the third quarter GDP data is released.
CPI lowered the average value than expected, the Australian dollar rose
The Australian dollar rose immediately after the release of the Australian CPI data today. The overall inflation rate in the third quarter was 0.8% quarter-on-quarter, in line with expectations. The annual overall inflation rate was 3.0%, lower than the expected 3.1%. However, the RBA often refers to the revised quarter-on-quarter average data of 0.7%, which is higher than the expected 0.5%, and the annual rate is 2.1%, compared to the expected 1.8%.
In the third quarter, more than 50% of the Australian population was blocked, and economic activity is expected to decrease, which is understandable. Therefore, price pressure is also expected to be benign. For the Reserve Bank of Australia, the average increase after the CPI cut is not ideal, but it is unlikely to be enough to change their austerity agenda.
Soaring inflation and high energy prices may benefit the Australian dollar
Globally, inflation is a hot topic. Regardless of supply chain issues, as the northern hemisphere prepares to enter winter, energy prices have soared in the past few months. Many factors have caused supply to fall short of demand.
In North America, the hurricane season in the Gulf of Mexico has weakened oil production. The natural gas pipeline between Britain and Europe ruptured, and Russia insisted that the European Union approve their pipeline in the Balkans, allowing prices to be maintained. At the same time, the damage caused by the Asian typhoon season and the closure of several mines put pressure on the power supply. Due to the epidemic and insufficient OPEC+ supply, and the port is still blocked, shipping costs have soared.
With global vaccination and economic recovery, some of these problems may be alleviated. But this may not be achieved in a short period of time, and high energy prices may persist . Ultimately, consumers will face higher prices. Although government officials and the market still believe that these inflationary pressures will fall, it is unclear how long inflation will continue at high levels before then.
If energy prices remain high for a long time, the impact on the Australian dollar will be twofold. First, as an energy exporter, this may lead to a better bottom line of trade balance and subsequent Australian dollar buying. Second, high inflation may be more sticky than the central bank expected. This may lead to tightening of monetary policy, pushing up interest rates. The rate of response of the Reserve Bank of Australia will determine the yield of the entire curve, and this will play a role in the attractiveness of the Australian dollar or other aspects.
However, the high level of inflation has also promoted the market's expectations of the Fed's tightening policy. At the same time, the third quarter GDP of the United States is about to be released, and investors are expected to avoid making big bets. Before the release of key US GDP data tomorrow, AUD/USD traders will continue to pay attention to US durable goods orders in September. The current forecast for this data is -1.1%, compared with the previous value of 1.8%.
(Australian dollar against the dollar daily chart)
GMT+8 At 15:03 on October 27th, the Australian dollar against the US dollar was quoted at 0.7531/33
Bonus rebate to help investors grow in the trading world!