AUD/USD: bullish best back off the table? 0.77 is a tough one

Despite the surprise CPI data overnight with headline inflation picking up to 1.3% from 1%, more than expected, that dented market expectations of an RBA rate cut, the Aussie has sold off again from the highs scored slightly through the 0.77 handle on the event. 

However, The RBA's favoured measure, the trimmed mean CPI, remained steady at 1.7% and the data is still not strong enough to entirely rule out a further cut in due course.  "Our bias with the AUD is still only to buy it against the New Zealand dollar, where rate differentials are pretty compelling and the Kiwi still looks overvalued," argued Kit Juckes, economist at Societe Generale. 

Meanwhile, the DXY is attempting a correction of the sell-off form the nine year highs through the 99 handle, from below 98.40 to current 98.58 spot. Oil is better offered after a test of the $49 handle WTI, rebound to $50 again after the EIA data that offered weekly crude oil inventories -553K vs +2M estimate, but WTI is back on the offer again. We have also has better data from the US adding fuel to the bears fire. S&P 500 is back off today's highs in between the range of 2130.7 and 2146.10 at 2140.00 supporting a risk-on play with the Yen down from 104.02 to 104.61 lows vs the greenback. 

AUD/USD levels

Analysts at Commerzbank explained that the market has again recovered in its range and again attention is focussed on the 0.7731 September highs. "Above 0.7730/60 would introduce scope to the 0.7836 April high and this is an increasing probability. It remains bid while above the five month support line at 0.7540. Below the 5 month support line lies the 2016 uptrend line at 0.7518. Further down lies the September low at 0.7443 and the 200 day moving average at .7467. This remains a critical break down point to the 0.7146 May low."