Australia's inflation slows further.

The Australian dollar strengthened slightly as most investors shrugged off the latest tariffs imposed by U.S. President Donald Trump while awaiting the release of the latest U.S. Consumer Price Index (CPI) report. Additionally, investors continue to monitor the monetary policy outlook of the Reserve Bank of Australia (RBA). It is anticipated that the RBA may begin cutting interest rates this month due to declining inflation and signs of slowing economic growth.

The Producer Price Index (PPI) rose by 0.8% quarter-on-quarter in Q4 2023, lower than the market's expectation of 1.0%. However, this marks the 18th consecutive quarter of rising producer inflation, driven primarily by key sectors. In particular, real estate operators saw a 1.5% increase, mainly due to rising rental and land prices. Meanwhile, accommodation prices surged by 8.3%, reflecting seasonal demand for summer holiday stays. On the other hand, refining and fuel production prices dropped by 6.3%, reflecting the continued decline in global oil prices, which could slightly reduce production costs for other goods.

Australia’s inflation rate fell to 2.4% year-on-year in Q4 2024, down from 2.8% in Q3, marking the lowest level since 2021, as inflation in various goods declined rapidly. Meanwhile, electricity prices continued to drop significantly by 25.2%, mainly due to ongoing government energy subsidies. Additionally, service sector inflation fell to a three-quarter low of 4.3%, with food and beverage prices experiencing the largest declines. However, annual inflation increased to 3.2%, surpassing the RBA’s target range of 2-3%.

Australia's trade surplus fell to AUD 5.09 billion in December from AUD 6.79 billion in the previous month. This decline was largely due to a sharp rise in imports, which grew by 5.9% month-on-month, rebounding from a 1.4% contraction in November. Most of the imported goods were intermediate products for further production. Additionally, fuel imports surged by 11.5%. Consumer goods imports also increased by 3.6% to AUD 12.19 billion, mainly comprising textiles, clothing, and footwear.

Australia’s exports rose by 1.1% but slowed sharply from a 4.2% increase in November. Despite the slowdown, total export value reached a 10-month high of AUD 44.03 billion, with most exports still consisting of metal ores and other minerals. Meanwhile, non-agricultural exports fell by 9.5%, including a sharp 22.4% drop in gold exports to AUD 3 billion, with most sales still directed to China and Japan.

The Services PMI increased to 51.2 in January from 50.8 in December, indicating continued growth in the services sector for the 12th consecutive month, albeit at a modest pace. This growth was primarily supported by steadily rising demand, leading to a solid increase in new orders. Additionally, the expansion was bolstered by a resurgence in new export orders, particularly from China, following a rebound in employment after a decline in the previous month.

Techical analysis data (5H)

Resistance: 1.6053, 1.6093, 1.6158

Source: Investing.com

Buy/Long 1: If the price touches support in the price range of 1.5885 - 1.5949 but cannot break the support at 1.5949, you may set a TP at approximately 1.6093 and SL at around 1.5844 or according to your acceptable risk.

Buy/Long 2: If the price breaks the resistance in the price range of 1.6053 - 1.6093, you may set a TP at approximately 1.6158 and SL at around 1.5885 or according to your acceptable risk.

Sell/Short 1: If the price touches resistance in the price range of 1.6053 - 1.6093 but cannot break the resistance at 1.6053, you may set a TP at approximately 1.5885 and SL at around 1.6158 or according to your acceptable risk.

Sell/Short 2: If the price breaks the support in the price range of 1.5885 - 1.5949, you may set a TP at approximately 1.5844 and SL at around 1.6093 or according to your acceptable risk.

Pivot point February 12, 2025 09:48 PM. GMT+7