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.

StoneX Europe Ltd makes no representation or warranty and assumes no liability as to the accuracy or completeness of the information provided, nor any loss arising from any investment based on a recommendation, forecast or other information supplied. You should always seek independent advice as to your suitability to speculate in any related markets and your ability to assume the associated risks, if you are at all unsure. We are not under any obligation to update any such material. Any opinion made may be personal to the author and may not reflect the opinion of StoneX Europe Ltd.

CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 67.6% 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. Please ensure you fully understand the risks involved by reading our full risk warning.

FOREX.com is a trading name of StoneX Europe Limited, and FOREX.com/ie is a domain operated by StoneX Europe Ltd, a member of StoneX Group Inc. StoneX Europe Ltd, is a Cyprus Investment Firm (CIF) company registered to the Department of Registrar of Companies and Official Receiver with a Registration Number HE409708, and authorized and regulated by the Cyprus Securities & Exchange Commission (CySEC) under license number 400/21. StoneX Europe is a Member of the Investor Compensation Fund (ICF) and has its registered address at Nikokreontos 2, 5th Floor, 1066 Nicosia, Cyprus.

FOREX.com is a trademark of StoneX Europe Ltd, a member of StoneX Group Inc.

This website uses cookies to provide you with the very best experience and to know you better. By visiting our website with your browser set to allow cookies, you consent to our use of cookies as described in our Privacy Policy.

Through passporting, StoneX Europe is allowed to provide its services and products on a cross-border basis to the following European Economic Area ("EEA") states: Austria, Bulgaria, Croatia, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Ireland, Italy, Latvia, Liechtenstein, Lithuania, Luxembourg, Malta, Netherlands, Norway, Poland, Portugal, Romania, Slovakia, Slovenia, Spain, Sweden.

StoneX Europe Ltd products, services and information are not intended for residents other than the ones stated above.

StoneX Europe Ltd may make third party material available on this website which may contain information included but not limited to the conditions of financial markets. The material is for information purposes only and does not contain, and should not be construed as containing, investment advice and/or investment recommendation and/or an investment research and/or an offer of or solicitation for any transactions in financial instruments; any decision to enter into a specific transaction shall be made by the client following an assessment by him/her of their situation. StoneX Europe Ltd makes no representation or warranty and assumes no liability as to the accuracy or completeness of the information provided, nor any loss arising from any investment based on a recommendation, forecast or other information supplied. You should always seek independent advice as to your suitability to speculate in any related markets and your ability to assume the associated risks, if you are at all unsure. We are not under any obligation to update any such material. Any opinion made may be personal to the author and may not reflect the opinion of StoneX Europe Ltd.