CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 82.67% of retail investor accounts lose money when trading CFDs. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money

AUD/USD analysis: Focus turns to GDP data after unexpected CPI rise

By Kyle Rodda

15:57, 4 June 2024

Higher-than-expected monthly CPI data watered down expectations for RBA interest rate cuts in 2024; the markets will now shift attention to quarterly GDP data on Wednesday, June 5.

Monthly CPI indicator signals sticky inflation

Australia’s monthly CPI indicator was stronger than expected in April, suggesting sticky inflationary pressures in the economy. The headline CPI figure rose to 3.6% from 3.5%, defying expectations of a drop to 3.4%. More worryingly, the trimmed mean figure, a better measure of underlying inflation, rose to 4.1%, extending a recent trend. While the CPI indicator does not account for the full CPI basket of the official quarterly release, the data implies that the disinflation process in the Australian economy is stalling and that inflation could be re-anchoring above the central bank’s target.

(Source: ABS)

What is your sentiment on AUD/USD?

0.63637
Bullish
or
Bearish
Vote to see Traders sentiment!

Traders price out RBA cuts in 2024

The CPI indicator reaffirmed the view implied in the markets that the RBA will be on hold for the rest of 2024. Despite signs of weaker economic activity and a softening labour market, trimmed mean inflation potentially 150 basis points above the mid-point of the RBA’s target range suggests policy needs to be restrictive for a more extended period to return inflation to target. However, futures suggest the markets don’t see the need for further rate hikes, with the implied next move in the cash rate a cut, priced-in for the first or second quarter of 2025.

(Source: ASX)

GDP data expected to affirm softening growth trend

Forecasters expect decelerating economic growth in Australia in the fiscal third quarter. Consensus estimates point to a 1.2% year-over-year rise in GDP, falling from 1.5% in the previous period. Mixed GDP partials leading into the national accounts imply potential downside risks to this number. The markets will focus on “per capita GDP growth” for clues about household strength and to what extent high levels of overseas migration are driving economic activity.

GBP/USD

1.26 Price
-0.450% 1D Chg, %
Long position overnight fee -0.0040%
Short position overnight fee -0.0043%
Overnight fee time 22:00 (UTC)
Spread 0.00130

EUR/USD

1.05 Price
+0.340% 1D Chg, %
Long position overnight fee -0.0080%
Short position overnight fee -0.0002%
Overnight fee time 22:00 (UTC)
Spread 0.00024

USD/JPY

153.73 Price
+0.680% 1D Chg, %
Long position overnight fee 0.0082%
Short position overnight fee -0.0164%
Overnight fee time 22:00 (UTC)
Spread 0.060

AUD/USD_zero

0.64 Price
-0.140% 1D Chg, %
Long position overnight fee -0.0049%
Short position overnight fee -0.0033%
Overnight fee time 22:00 (UTC)
Spread 0.00050

(Source: Bloomberg)

Technical analysis: AUD/USD

As always, fluctuations in the US dollar, as the market prices in US interest rate expectations, drive the AUD/USD. Therefore, US employment data will be the most significant fundamental influence on the pair this week. From a technical standpoint, the AUD/USD is forming a continuation pattern, which suggests a looming break-out. A push above downward sloping trendline resistance could be a bullish signal. The market has faded rallies above 67 cents, while dips have been bought below 66 cents.

(Source: Trading View)

(Past performance is not a reliable indicator of future results)

Rate this article

The difference between trading assets and CFDs
The main difference between CFD trading and trading assets, such as commodities and stocks, is that you don’t own the underlying asset when you trade on a CFD.
You can still benefit if the market moves in your favour, or make a loss if it moves against you. However, with traditional trading you enter a contract to exchange the legal ownership of the individual shares or the commodities for money, and you own this until you sell it again.
CFDs are leveraged products, which means that you only need to deposit a percentage of the full value of the CFD trade in order to open a position. But with traditional trading, you buy the assets for the full amount. In the UK, there is no stamp duty on CFD trading, but there is when you buy stocks, for example.
CFDs attract overnight costs to hold the trades (unless you use 1-1 leverage), which makes them more suited to short-term trading opportunities. Stocks and commodities are more normally bought and held for longer. You might also pay a broker commission or fees when buying and selling assets direct and you’d need somewhere to store them safely.
Capital Com is an execution-only service provider. The material provided in this article is for information purposes only and should not be understood as investment advice. Any opinion that may be provided on this page does not constitute a recommendation by Capital Com or its agents and has not been prepared in accordance with the legal requirements designed to promote investment research independence. While the information in this communication, or on which this communication is based, has been obtained from sources that Capital.com believes to be reliable and accurate, it has not undergone independent verification. No representation or warranty, whether expressed or implied, is made as to the accuracy or completeness of any information obtained from third parties. If you rely on the information on this page, then you do so entirely at your own risk.

Still looking for a broker you can trust?

Join the 660,000+ traders worldwide that chose to trade with Capital.com

1. Create & verify your account 2. Make your first deposit 3. You’re all set. Start trading