Australia will release Q1 inflation data early on Wednesday as resistance is holding against the New Zealand dollar.
AUDNZD – Daily Chart
The AUDNZD pair found resistance at the 1.094 level and now trades at 1.0886 with the potential to slip further to the 1.08 level.
Inflation data for the Australian economy will be released on Wednesday at 6:45 am HKT.
Q4 data showed inflation at 4.7%, down from 6.7% a year ago. A sharper drop in inflation could reduce the Aussie dollar’s recent gains.
The International Monetary Fund has warned that Australia will lag behind other developed nations in reducing inflation and boosting economic growth. Australian Treasurer Jim Chalmers is about to visit Washington for high-level talks.
With less than a month until the May budget, Chalmers will leave the country on Thursday to attend meetings with his counterparts at the G20, IMF, and World Bank.
The economic slowdown in China, growing tensions in the Middle East, and the prospect of delayed interest rate cuts weighing on the global economy are topics to be covered at the talks.
“These evolving global conditions make it an important time to engage with my counterparts and international institutions as we put the final touches on the May budget,” he said on Tuesday.
In the latest World Economic Outlook, released on Tuesday, the IMF forecast that headline inflation in Australia would ease to 3.5% this year, down from its October projection of 4%. However, the projections showed that consumer price growth would still be 3% on average through 2025 at the high end of the RBA’s 2% to 3% target band.
The inflation figures this week will test those projections. If inflation is shown to be weakening more than expected, it could lead to a drop in the Aussie dollar.
