AUD/USD: RBA today may matter less than CPI tomorrow - OCBC

The Australian Dollar (AUD) firmed this morning, in response to China's stimulus measures. Pair was last at 0.6844, UOB Group FX analysts Quek Ser Leang and Peter Chia note.  

RBA's priority is to bring inflation down to target

"Bullish momentum on daily chart intact while rise in RSI moderates near overbought conditions. Resistance at 0.6870 (2024 high), 0.69 levels. Support at 0.6750 (21 DMA), 0.6675 (50, 100 DMAs). Possibly, the CPI release tomorrow may matter more for AUD than the RBA MPC later (as markets were largely expecting RBA to hold)."

"Any downside print to data may renew market bets on RBA to cut and AUD may pullback on that. For RBA MPC later today (1230pm SGT), there were some chatters that RBA may bring forward its plans on lowering rates after the larger than expected magnitude of Fed cut last week. We doubt Fed cut has much influence and we still look for RBA to maintain cash rate at 4.35%."

"RBA Governor Bullock had earlier said that it is premature to be thinking about rate cuts as RBA's priority is to bring inflation down to target band of 2-3%. She explained that RBA board is seeking to balance reducing inflation in a reasonable timeframe and maintaining as many of Australia's recent labour market gains as possible, with unemployment at a low 4.2%."