Australian Dollar Talking Points
AUD/USD[1] extends the decline from the monthly high (0.7891) as the update to the US Consumer Price Index (CPI) shows a larger-than-expected rise in inflation, and the exchange rate may continue to give back the advance from the start of May as it carves a series of lower highs and lows.
AUD/USD Pullback Eyes 50-Day SMA as Bearish Price Series Emerges
AUD[2]/USD[3] falls back towards the 50-Day SMA (0.7708) after taking out of the March high (0.7849), and fresh data prints coming out of the US may continue to sway the exchange rate as Federal Reserve officials emphasize the new monetary policy framework.
While speaking at the National Association for Business Economics (NABE) International Symposium, Fed Vice-Chair Richard Clarida pointed out that “the Committee combined our forward guidance for the federal funds rate with enhanced, outcome-based guidance about our asset purchases,” but the permanent voting-member on the Federal Open Market Committee[4] (FOMC) went onto say that “the economy remains a long way from our goals” as the US Non-Farm Payrolls (NFP) report[5] revealed a material slowdown in job growth.
Clarida struck a similar tone in regards to the spike in the Consumer Price Index (CPI)[6] as inflation is “likely to rise somewhat further before moderating later this year,” and the comments suggest the FOMC is in no rush to switch gears as the central bank remains “committed to using our full range of tools to support the economy for as long as it takes.”
In turn, the FOMC may stick to the same script at the next interest rate decision on June 16 as the central bank braces a for a transitory rise in inflation, but the recent flip
