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• Australian Dollar gained over 1% against the US Dollar, on Wednesday.
• US April CPI rose by 0.3% MoM, core CPI dipped as expected.
• Australian wages grew less than estimated, hinting at easing inflationary pressures.

The Australian Dollar surged more than 1% against the US Dollar on Wednesday after data showed that consumer inflation moderated in April, with the underlying Consumer Price Index (CPI) edging lower for the first time in six months. As Thursday’s Asian session begins, the AUD/USD trades at 0.6695, virtually unchanged.

AUD/USD climbs as inflation moderates in both Australia and the US
 

Inflation in the US began to show signs of cooling after posting consecutive readings of stalling, which sparked a change of tone amongst Federal Reserve officials.

The US Department of Labor revealed that April’s CPI rose by 0.3% MoM, down from March’s 0.4% and estimates. The so-called core CPI, which excludes volatile items like food and energy, dipped from 0.4% to 0.3% as expected.

At the same time, Retail Sales were unchanged in April, at 0% MoM, missing projections of a 0.6% increase as higher borrowing costs and mounting debt, weighed on American consumers.

Minneapolis Fed President Neel Kashkari stated that, given the higher government debt, achieving the 2% inflation target might necessitate higher borrowing costs in the near term. He expressed surprise at the resilience of consumer spending and highlighted the critical question of "how restrictive monetary policy is.”

On the Aussie’s front, wages increased less than estimated in Q1 2024, hinting that inflationary pressures could be easing. The Wage Price Index (WPI) came at 0.8% QoQ, down from 1% in Q4 2023, and missed estimates of 0.9%.

Ahead in the economic docket is Australia’s Employment report. Estimates suggest the economy added 23.7K employees to the workforce after laying off 6.6K in March. The unemployment rate is forecast to increase to 3.9% after ticking higher to 3.8% previously.

AUD/USD Price Analysis: Technical outlook
 

The daily chart suggests that the AUD/USD uptrend will continue, but buyers must decisively surpass the 0.6700 figure. Momentum is on their side, as the Relative Strength Index (RSI) aims up, shy of turning overbought.

That said, once 0.6700 is cleared, the next stop would be the psychological 0.6750 figure, followed by the 0.6800 mark. Conversely, if AUD/USD stays below 0.6700, look for a pullback to the May 3 high at 0.6647, ahead of diving to 0.6600.

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