Australian CPI spoils May rate cut plans, long AUD/USD for 0.7950 – Growth Aces

FXStreet (Barcelona) - The Growth Aces Research Team remains of the view that a May rate cut by RBA is not on the cards, and that AUD/USD has more room to the upside towards 0.7950.

Key Quotes

“Minutes of the April policy meeting released this week showed the Board was open to another easing but had wanted to see more data, including the inflation report, before deciding. Interbank futures currently imply around a 45% chance of a move at the next policy meeting on May 5, rising to almost 80% by June.”

“We are still the opinion that the RBA will not change interest rates. Today’s CPI reading reduced the risk of a cut in May.”

“The AUD/USD opened slightly above 0.7700 on Wednesday and rose strongly after Australian CPI reading.”

“In our opinion there is still potential for further rise in the AUD/USD as we do not expect a rate cut in May, against the market consensus. Moreover, demand for the USD has lowered recently, after a series of weaker-than-expected data from the US economy.”

“We maintain our long position taken at 0.7730. The target of our position is 0.7950.”

“Resistance: 0.7844 (high Apr 20), 0.7884 (high Mar 26), 0.7904 (high Mar 25)”

“Support: 0.7699 (10-dma), 0.7683 (low Apr 21), 0.7673 (low Apr 16)”