• The Australian dollar absorbs after the release of gentle CPI data on Wednesday.
• Australia’s monthly CPI in December 2024 increased by 2.5% y / y, remaining in the range of RBA 2-3%.
• Traders expect the FED to keep the policy rate in the target range 4.25%-4.50%.

The Australian dollar (AUD) extends its losses on the third day in a row compared to the US dollar (USD), driven by data with lower than expected consumer prices from Australia published on Wednesday.

Australia CPI increased by 0.2% quarter per quarter in the fourth quarter of 2024, adapting the enhance in the previous quarter observed in the previous quarter, but there are no market expectations by 0.3%. Every year, CPI inflation has decreased to 2.4% in Q4 from 2.8% in Q3, also below the consensus forecast of 2.5%.

The monthly CPI in Australia in December 2024 increased by 2.5% year -on -year, according to forecasts and more compared to 2.3% of November. This meant the highest reading since August, but remained in the range of Australia’s target bank (RBA) from 2% to 3% for the fourth month in a row. The cut average CPI RBA increased by 3.2% y / y, the slowest rate for three years, slightly in relation to the expected 3.3%, but still above the target range of the central bank.

Combining inflation pressure at the end of 2024 strengthened the matter of a potential reduction in interest rate by RBA in February. The central bank maintained the official money (OCR) at a constant level of 4.35% from November 2023, which emphasizes that inflation must “balance” return to its target range 2% -3% before all rate reductions can be considered .

The Audio also faced the challenges among increased risk aversion due to tariff threats by US President Donald Trump. On Monday evening President Trump announced plans to apply tariffs on the import of computer tokens, pharmaceuticals, steel, aluminum and copper. The goal is to transfer production to the United States (USA) and strengthen domestic production.

Australian dollar is absorbed because the American dollar remains stronger among the cautious Fed

• The American dollar index (DXY), which measures the value of the American dollar compared to the six main currencies, remains about 108.00 at the time of writing. Investors focus on the upcoming decisions of the percentage of the US Federal Reserve (FED), which is to be in the center of the attention of session in North America. A cautious attitude of the FED policy still provides support for Greenback.
• According to the CME Fedwatch tool, market expectations indicate almost 100%certainty that the FED will maintain the policy rate in the target range 4.25%-4.50%. However, traders will strictly monitor the Fed Fed press conference, Jerome Powell, to obtain all guidelines for the future direction of monetary policy.
• “Nobody knows what to expect from the White House. Political movements are still very unclear, but we know that many of these proposals that are talked about in the White House are a bit inflationary and I think it will keep it under control, “said US Bank Bank Beth Ann Bovino’s chief economist.
• Scott Bessent, the secretary of the Treasury under Trump, stated that he intends to introduce up-to-date universal tariffs for US import, starting from 2.5%. These tariffs can enhance to even 20%, reflecting Trump’s aggressive position on trade policy, in accordance with his campaign rhetoric last year.
• Talking to reporters on board Air Force on one Tuesday, US President Donald Trump said that “he wants” much larger “tariffs than 2.5%, as the secretary of the treasury Scott Bessent suggested. However, Trump has not yet decided on specific tariff levels.
• Traders expect the FED to maintain a fixed reference rate overnight in the 4.25% -4.50% range at the January meeting. What’s more, Trump’s policy can cause inflation pressure, potentially limiting the FED to one more rate reduction.
• PMI production of NBS in China fell to 49.1 in January, compared to 50.1 in December, there is no expectations on the 50.1 market. Similarly, NBS, which is not productive PMI production dropped to 50.2 in January compared to reading 52.2 in December. As relatives of trading partners, China’s economic results significantly affect the Australian economy.
• The Australian dollar did not receive support from fresh stimuli means in China to promote the development of index investment products, its latest efforts to revive the capital market. China Securities Regulators Commission (CSRC) approved the second round of long -term pilot programs of action investments worth 52 billion yuan (USD 7.25 billion).
• Industrial profits in China fell by 3.3% year on year to 7,431.05 billion in 2024, with a soft decrease by 4.7% recorded in the first 11 months of the year. This means the third year of contraction, after a decrease by 2.3% in 2023. The continuous slowdown reflects continuous economic challenges, including penniless demand, growing deflation pressure and an extended decrease in the real estate sector.

The Australian dollar moves below 0.6250 after breaking below the ascending channel

The Aud/USD pair trads on Wednesday near 0.6230, breaking below the channel ascending on the daily chart, signaling the shift towards the bear. In addition, the 14-day relative strength rate (RSI) has fallen below level 50, strengthening the bears on the market.

The decisive break below the key support zone on the lower border of the growing channel has further strengthened the bear. This may push the pair of Aud/USD towards 0.6131, the lowest since April 2020, noted on January 13.

On the other hand, immediate resistance lies on the nine -day interpretation of the movable medium (EMA) at 0.6256, which is in line with the lower channel limit. The reflection above this level and return to the growing channel can transfer the bias back to the stubborn, and the pair potentially directed the upper border near 0.6360.

Aud/USD: Daily Chart