Australian markets are bracing for another key data update this week and if the numbers come in stronger again, like we saw with last week’s employment data then we can expect the Aussie dollar to continue to push higher. The employment numbers last week showed a resilient job market with the Unemployment Rate falling back unexpected to 4.1% and this now has the market pricing in another two hikes from the RBA, on top of January’s rise, coming in 2026 – with one possible at the March or May meetings.
The market is expecting this week’s CPI data to show a 0.3%-0.4% month-on-month increase with the year-on-year data slipping to 3.7% from 3.8% but still remaining well above the RBA’s target range of between 2% and 3%. Traders feel that anything close to target or above should lock in those rate hikes and give added strength to the Aussie dollar that has been performing strongly against the greenback and even better on the crosses.
The Aussie is once again trading close to annual highs that were hit earlier in February just under the 0.7150 level and the 2023 high which sits slightly higher. A stronger print should see these levels challenged while a lower-than-expected print should see the pair drop back in to the range but remain bid on dips. Probably the greater risk is a much lower than expected print, going very much against the recent trend, which could turn current Aussie sentiment on its head and see a sharp reversal of recent moves and the Aussie drop hard – however most traders have this last scenario as the least likely.
Resistance 2: 0.7157 – 2023 High
Resistance 1: 0.7147 – Trendline Resistance and 2026 High
Support 1: 0.7024 – Trendline Support
Support 2: 0.6895 – February Low
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