Fallout from the Russian/Ukraine war continues to send the Euro (EUR) lower not only against the Australian Dollar (AUD) but against the main board of currency crosses. Equities slipped lower at the start of the week as “risk” conditions faded sending the cross to 0.6670 (1.5000) before recovering to 0.6745 (1.4830) this morning. US indices and commodity prices are recovering somewhat as we head into the NY daily close. The German Business Climate Index came in better than the 88.3 expected at 91.8 surprising punters however analysts warn of early optimism in a war. Australian CPI q/q rose 1.3% yesterday for Q1 following a 0.8% rise in the 2021 Q4. Year on year this takes it from 3.5% to 5.1% surpassing forecasts of 4.6%. To blame was surging transport costs, fuel prices and building costs. This inflation release officially puts the RBA “behind the curve” as inflation is now outside the RBA’s target band. This benign said we expect the RBA to hike rates at next week’s meeting from 0.10% to 0.25%. To us the likely scenario is a retest of 0.6825 (1.4650) developing over the coming days.
Current Level: 0.6744 (1.4830)
Resistance: 0.6870 (1.5200)
Support: 0.6580 (1.4550)
Last Weeks Range: 0.6705-0.6876 (1.4543-1.4915)