FxWirePro: AUD/USD eases as soft CPI data strengthens case for RBA rate cut

• AUD/USD eased modestly on Wednesday as market digested softer-than-expected inflation data that raised expectations of monetary policy easing by the Reserve Bank of Australia (RBA).

• Australian consumer prices rose at their slowest annual pace in more than four years during the June quarter, according to data released on Wednesday..

• Australia’s Q2 trimmed mean Consumer Price Index (CPI)—a key measure of underlying inflation watched closely by the RBArose 0.6% quarter-on-quarter and 2.7% year-on-year, slightly below consensus forecasts of 0.7% and 2.9% respectively.

• Market participants had already priced in the possibility of a rate cut in the coming months, the subdued inflation figures further firm up the case for an August or September rate cut.

• Looking ahead, traders will monitor a speech by RBA Deputy Governor Andrew Hauser, scheduled for Thursday at the Barrenjoey Economic Forum. His remarks could offer fresh clues on the central bank’s rate trajectory.

•  Immediate resistance is located at 0.6541(SMA 20), any close above will push the pair towards 0.6586(July 25th high).

•  Support is seen at 0.6493 (38.2%fib) and break below could take the pair towards 0.6458(Lower BB).

 Recommendation: Good to sell around 0.6520 with stop loss of 0.6600  and target price of 0.6450