AUD/USD Weekly Outlook: Australian Dollar Faces Jobs Data and US CPI

View related analysis:

Australian Data in Focus: Jobs, Wages, and Sentiment Ahead of RBA Decision

The four main economic data points next week include sentiment for consumer and business, wage price index and employment. I don’t see any of these derailing an RBA cut on May 20, but they do of course help us keep a pulse on the economy.

“Tariff turmoil” saw Australian consumer confidence fall by -6% in April—its steepest monthly decline in nearly two years, according to the Westpac survey. All sub-indices declined over the month, with the ‘family finances compared to a year ago’ gauge plunging -8.5%. I doubt we’ll see a strong print for consumer confidence this week, though the rebound in risk sentiment might help soften the blow. The ASX 200 has rallied around 15% since the April low (which formed the day ahead of the Westpac sentiment report) and AUD/USD is up around 10%.

The wage price index is likely to show wages rising at a slower pace, though it’s rarely a market mover for AUD/USD traders.

Thursday’s employment report, however, warrants attention—although it seems more likely than not to deliver another set of robust figures. I’m personally struggling to find a tradie available for work, and one I spoke to didn’t even have time to provide a quote. But with trimmed-mean inflation now within the Reserve Bank of Australia’s (RBA) 2–3% target band and consumer sentiment shifting, a rate cut on May 20 appears increasingly likely.

US CPI and Retail Sales in Focus for AUD/USD Traders

Consumer prices are the main event from the US this week. Contrary to tariff-induced fears, April’s CPI data was softer than expected. Core CPI rose just 0.1%—a nine-month low—while the annual rate of core inflation slowed to 2.8% year-on-year, its lowest level since March 2021. CPI also contracted by -0.1%, its first sub-zero print in nearly four years.

While another soft CPI print could bolster expectations of a Federal Reserve (Fed) rate cut, the Fed is unlikely to signal any moves until there is clarity on a potential US–China trade deal. Fed fund futures currently imply a 50.4% chance of a cut in July, or 44.1% of one in September.

Retail sales might produce another solid set of figures as shoppers bring forward purchases due to the threat of tariffs. Inflation expectations are also expected to remain high in Friday’s consumer sentiment report from the University of Michigan.

AUD/USD Correlations

Asset managers increased their net-short exposure to AUD/USD by 3.5k contracts last week.
However, they reduced overall exposure—trimming longs by 4% (-1.8k contracts) and shorts by 3% (-1.8k contracts).
Large speculators also trimmed gross longs by 1.3% (-359 contracts) and shorts by 2.5% (-1.9k contracts), resulting in a 1.5k contract reduction in net-short exposure.

AUD/USD Futures: COT Report Shows Reduction in Market Positioning

Asset managers increased their net-short exposure to AUD/USD by 3.5k contracts last week
Though they actually reduced their overall exposure, trimming longs by -4% (-1.8k contracts) and shorts by -3% (-1.8k contracts)
Large speculators also trimmed gross longs by -1.3% (-359 contracts) and shorts by -2.5% (-1.9k contracts), sending net-short exposure lower by -1.5k contracts

AUD/USD Technical Analysis

AUD/USD reached my initial downside target at the April VPOC (volume point of control) of 0.6371, which provided support on Friday. The pair opened bid on Monday, supported by positive headlines surrounding US–China trade talks—though concrete details have yet to emerge. Still, should AUD/USD break above Friday’s high, a retest of the 200-day SMA (simple moving average) at 0.6454 could be on the cards.

However, I suspect the retracement in AUD/USD is not yet complete, leaving the pair vulnerable to another leg lower. The daily RSI (2) has yet to reach oversold, after a bearish divergence preceded the recent selloff.

A break beneath the 0.6344 low opens the door for a move towards 0.6300, near the 50-day SMA and lower implied volatility band. Conversely, a sustained break above the 200-day SMA would suggest another attempt at the 0.65 handle.

How to trade with City Index

You can trade with City Index by following these four easy steps:

Open an account, or log in if you’re already a customer

• Open an account in the UK
• Open an account in Australia
• Open an account in Singapore
Search for the market you want to trade in our award-winning platform
Choose your position and size, and your stop and limit levels
Place the trade

StoneX Financial Ltd (trading as “City Index”) is an execution-only service provider. This material, whether or not it states any opinions, is for general information purposes only and it does not take into account your personal circumstances or objectives. This material has been prepared using the thoughts and opinions of the author and these may change. However, City Index does not plan to provide further updates to any material once published and it is not under any obligation to keep this material up to date. This material is short term in nature and may only relate to facts and circumstances existing at a specific time or day. Nothing in this material is (or should be considered to be) financial, investment, legal, tax or other advice and no reliance should be placed on it.

No opinion given in this material constitutes a recommendation by City Index or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although City Index is not specifically prevented from dealing before providing this material, City Index does not seek to take advantage of the material prior to its dissemination. This material is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.

For further details see our full non-independent research disclaimer and quarterly summary.

CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 69% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money. CFD and Forex Trading are leveraged products and your capital is at risk. They may not be suitable for everyone. Please ensure you fully understand the risks involved by reading our full risk warning.

City Index is a trading name of StoneX Financial Ltd. Head and Registered Office: 1st Floor, Moor House, 120 London Wall, London, EC2Y 5ET. StoneX Financial Ltd is a company registered in England and Wales, number: 05616586. Authorised and regulated by the Financial Conduct Authority. FCA Register Number: 446717.

City Index is a trademark of StoneX Financial Ltd.

The information on this website is not targeted at the general public of any particular country. It is not intended for distribution to residents in any country where such distribution or use would contravene any local law or regulatory requirement.

Delayed London Stock Exchange (LSE) Data

The London Stock Exchange (LSE) market data displayed or referenced on this website is provided on a delayed basis and is not in real time. The delay period may vary but is typically at least 15 minutes. This data is intended for information purposes only and should not be relied upon for trading, investment, or other financial decisions. We do not guarantee the completeness, reliability, or suitability of the data for any particular purpose. Users should consult real-time data sources and obtain professional advice before making any financial decisions.