Global macro overview for 27/04/2016:
The Australian inflation data was released overnight and it completely surprised the investors. The Consumer Price Index dropped to -0.2%q/q (1.3% y/y) from 0.4% q/q (1.7% y/y), which is worse than the expected number of 0.3% q/q (1.7% y/y). This is the biggest decline since 2009. The most important factors that were dragging inflation lower in the quarter include a 10% plunge in petrol and an 11% decline in fruit prices. Moreover, the cost of international holiday travel and accommodation also declined. In conclusion, lower inflation will increase the probability of a potential interest rate cut from the Reserve Bank of Australia as early as next week.
Let's now take a look at the AUD/USD technical picture in the daily time frame. After making a swing high at the level of 0.7835, the market is now testing the lower levels of the range. Nevertheless, the bulls are still in control over this market and the next support is seen at the level of 0.7567. Only a sustained break out below the level of 0.7411 would put the bears back to control.
