Today, the Australian dollar received support from a major macroeconomic report. Australia's key data on inflation growth were published during Wednesday's Asian session, which turned out to be quite good. It should be noted that the country was in lockdown for almost the entire third quarter – a strict lockdown was in effect in the largest metropolitan areas. Nevertheless, inflation indicators have demonstrated a decent result, reflecting the "stress resistance" of the national economy. The inflation release leveled the negativity from the "Australian Nonfarm", which was published the week before last. Such a fundamental background allows AUD/USD buyers to develop an upward correction at least as long as the US dollar allows it.
So, the general consumer price index in the third quarter came out in accordance with the preliminary forecasts of most experts – both on an annual and quarterly basis. According to published data, the indicator increased to 3.0% in annual terms, and to 0.8% in quarterly terms. According to the RBA (by the truncated average method and the weighted median method), the core inflation index also showed positive dynamics, reflecting the recovery processes.
It is worth recalling here that the latest data on the Australian labor market did not let the Australian dollar sink, although the growth rate in the number of employed in September fell by 138 thousand. This indicator turned out to be in the negative area again, as in August – whereas before those negative dynamics was observed only in April 2020 when Australia was covered by the first wave of the coronavirus epidemic. But apparently, traders drew attention to the fact that the decline in the indicator occurred solely due to a decrease in the part-time component, while the component of full employment unexpectedly increased by almost 27 thousand for the first time since June of this year. At the same time, unemployment managed to pleasantly surprise AUD/USD traders. The September indicator came out in the "green zone", being at the level of 4.6%. This result turned out to be stronger relative to the preliminary expectations of most experts, who predicted an increase in the indicator to 4.9%.
It should be noted that we are talking about the period when 13 million residents of the country (about half of the population) were in conditions of a hard lockdown. The authorities of Australia's largest states imposed strict quarantine at the end of July, gradually tightening restrictive measures in August and September, up to the introduction of a curfew in five million Sydney and similar measures in five million Melbourne. In the context of these circumstances, today's release looks very "life-affirming", especially amid the weakening of quarantine restrictions. In connection to this, the authorities of New South Wales have lifted most of the restrictions that had been in effect for several months since October 18. The level of double-dose immunization among people over the age of 16 in this region has reached 80%. In the country's other largest state, Victoria, more than 91% of adults in the region have already received the first component of the vaccine, while 78% have already been fully vaccinated. This allowed the $5 million Melbourne to get out of a long lockdown. Overall, almost 75% of adults in Australia are now fully vaccinated, and almost 88% have received one vaccination. According to the declarative promises of the authorities, lockdowns will be unlikely after 80% of Australians have completed a full course of immunization.
All this suggests that the Australian economy has experienced the peak of the next wave of the coronavirus crisis. This is an important understanding in the context of further prospects for the normalization of the Central Bank's monetary policy. It can be recalled that after the results of the RBA's last meeting, the regulator did not revise its plans to curtail the incentive program. The Central Bank said it would buy government securities at a rate of $4 billion per week until mid-February next year. Given the latest releases, it can be assumed that the Reserve Bank will continue to adhere to this plan, whereas before the October meeting, rumors were circulating in the market that the next round of QE cuts would be postponed to March or April.
Such expectations allow AUD/USD buyers to move further to the next resistance level of 0.7570. Moreover, the US currency allows its Australian counterpart to gradually develop corrective growth. It's too early to talk about higher price values yet: the results of the Fed's November meeting may completely "redraw" the fundamental picture for the pair. However, a price increase within the designated range is quite likely at the moment.
From a technical point of view, the AUD/USD pair also retains the potential for the development of an upward correction. The nearest price "ceiling" for the pair is the 0.7570 mark – this is the upper line of the Bollinger Bands on the D1 timeframe. Currently, the pair on the daily chart is located between the middle and upper lines of this indicator, while the Ichimoku indicator continues to show a bullish "Line Parade" signal.