Market Insights > Daily Market Analysis

24 September 2025,07:22

Daily Market Analysis

Australian Inflation Surprise at 3.0% Reinforces RBA Hawkish Stance

24 September 2025, 07:22

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Key Takeaways:

*Australia’s August CPI came in at 3.0%, above forecasts, with housing inflation jumping 4.5%, pushing the AUD higher.

*Governor Bullock signaled progress on inflation but warned cost-of-living pressures will intensify in 2026, limiting scope for early rate cuts.

*PMI readings above 50 and GDP growth at 1.8% point to economic resilience, reinforcing sticky inflation risks and a hawkish RBA outlook.

Market Summary:

Australia’s consumer price index accelerated to 3.0% year-on-year in August, exceeding market forecasts and reinforcing expectations that the Reserve Bank of Australia will maintain its restrictive policy stance. The upside surprise was largely driven by persistent increases in electricity prices and housing costs, with housing inflation rising 4.5% annually, underscoring ongoing domestic price pressures.

The Australian dollar strengthened immediately following the release, reflecting market expectations that the RBA will delay any near-term easing. In her recent testimony before parliament, Governor Michele Bullock acknowledged “real progress” on inflation but emphasized that cost-of-living pressures are expected to intensify in early 2026, making a return to pre-pandemic inflation levels challenging.

The elevated inflation print, combined with resilient economic activity—PMI readings remain in expansionary territory and GDP growth holds at 1.8% annually—suggests the central bank is unlikely to consider rate cuts in the immediate future. This hawkish tilt is further supported by robust household consumption and sustained public demand, which continue to fuel economic momentum.

With inflation proving stickier than anticipated, the RBA is expected to maintain its current policy settings at upcoming meetings, potentially extending support for the Australian dollar in the near term. Market attention will now shift to upcoming labor market data and retail sales figures for further clues on the timing of any potential policy shift.

Technical Analysis

AUDUSD, H4:

The Australian dollar steadied after recent losses, with AUD/USD showing signs of recovery following a sharp 1.3% decline. The pair found support at 0.6585, rebounding from its immediate floor and now attempting to break out of a tight consolidation range.

Momentum indicators point to a potential shift higher. The RSI has rebounded from oversold territory and crossed above the midline, while the MACD formed a golden cross near the bottom and is edging toward the zero line—both suggesting improving bullish momentum.

The recovery comes against the backdrop of stronger-than-expected Australian CPI data and speculation that the Reserve Bank of Australia will maintain its hawkish bias. If AUD/USD sustains above its support base, near-term upside toward the 0.6700 handle could come into play.

Resistance Levels:0.6640, 0.6714

Support Levels: 0.6585, 0.6530

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