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AUD tests support at 0.7000

Published April 26, 2019

By Rhys Miles

We start today with a completely different outlook for the AUD than where we started Wednesday before the ANZAC daybreak. Weaker than expected inflation data on Wednesday started the decline.

Australian Q1 CPI undershooting expectations with overall prices unchanged in Q1 (+1.3% YoY). Price rises from the core measures were modest, averaging 0.2% QoQ (+1.4% YoY). The markets are now expecting the RBA to switch to an easing bias. Recent solid support continues for the AUD at 0.7000 despite a brief visitation to 0.6980.

Recent central bank policy announcements have been dovish. The Bank of Canada held its benchmark policy rate at 1.75% but dropped the tightening bias they introduced in late 2017. Growth forecasts for 2019 were revised down but Canadian (and global growth) is expected to strengthen in 2020. The Bank of Japan also left policy settings unchanged stating interest rates will remain very low until spring 2020.

Locally, the March trade balance is released at 10.45 am. Japanese industrial production and retail trade data for March is out during the day. Tonight, the key release is Q1 US GDP, as well as the final University of Michigan sentiment survey for April.