Aussie has steadied after last week’s strong advance, entering consolidation as markets brace for Q4 inflation data that could prove pivotal for RBA’s policy in the near term. With expectations firmly skewed toward a firm print, traders appear to wait for confirmation before extending long positions.
Consensus forecasts point to a renewed pickup in inflation. Headline CPI is expected to rise to 3.6%, while trimmed mean CPI is forecast at 3.2%, pushing both measures further above the RBA’s target band. The upcoming release is likely to reinforce concerns that inflation pressures remain sticky. That would make it harder for the RBA to justify an extended pause, particularly with labor market conditions showing renewed strength.
Market opinion remains divided on timing. Some see scope for a 25bp hike as early as next week, while others argue the RBA may prefer to wait another quarter to avoid premature action. Ultimately, the decision will hinge on the size and composition of the inflation print, alongside the bank’s assessment of broader economic conditions.
Technically, AUD/CAD edged higher this week and remains on upward acceleration mode as seen in D MACD. With current momentum, AUD/CAD should be on track to 161.8% projection of 0.l8902 to 0.9225 from 0.9055 at 0.9578, or even further to 200% projection at 0.9701. Outlook wil stay bullish as long as 0.9344 resistance turned support holds, in case of retreat.
In the bigger picture, last week’s strong break of 0.9375 key resistance (2024 high) should confirm that whole down trend from 0.9991 (2020 high) has completed as a correction to 0.8440 (2025 low). There is prospect for the current up trend to extend in the medium term to have a test on 0.9991 at least.
How far and how fast AUD/CAD extends will ultimately depend two factors: The pace and extent of RBA tightening; and the depth of deterioration in Canada–US trade relations.
