AUD/USD continues its recovery after Australian Q1 CPI data shows inflation stickier-than-forecast.
The result is likely to keep interest rates in Australia higher for a longer time than other G10 nations.
Bullish reversal signs are increasing on charts, suggesting the possibility of a trend reversal in the making.
AUD/USD trades off the highs of the day just below 0.6500 on Wednesday, after peaking at 0.6530 overnight following the release of stickier-than-expected Australian inflation data, which showed price gains were higher in Q1 than economists had predicted.
The Q1 Consumer Price Index (CPI) data rose by 3.6% instead of the 3.4% the market had expected, and the price stickiness reflected in the data suggests the Reserve Bank of Australia (RBA) will be even less likely to cut interest rates in the near-term.
The CPI data was a catalyst for an extension of the recovery in AUD/USD since the expectations of interest rates remaining high for longer is positive for the Australian Dollar. Higher interest rates mean more foreign capital inflows, boosting demand for AUD.
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