Ella 
AUD/USD surged more than 1% on Wednesday after data showed consumer inflation slowed in April, with the underlying consumer price index (CPI) falling for the first time in six months. AUD/USD was trading at 0.6695, essentially unchanged, at the start of Thursday’s Asian trading session.
AUD/USD climbs as inflation eases in Australia and US
U.S. inflation showed signs of cooling after continuous stagnation, which triggered changes in the policy preferences of Federal Reserve officials.
The U.S. Department of Labor reported that the consumer price index in April increased by 0.3% on a monthly basis, lower than the previous value and the expected value of 0.4%. So-called core CPI, which excludes volatile items such as food and energy, fell to 0.3% from 0.4%, in line with expectations.
Meanwhile, retail sales were flat at 0% on month in April, down from 0.6% expected, as rising borrowing costs and mounting debt weighed on U.S. consumers.
Minneapolis Fed President Neel Kashkari said that achieving the 2% inflation target may require higher borrowing costs in the short term given rising government debt. Kashkari expressed surprise at the resilience of consumer spending and highlighted the key question of “how restrictive monetary policy can be.”
In the Australian dollar, wages rose less than expected in the first quarter of 2024, suggesting inflationary pressures may be easing. The wage price index (WPI) quarterly rate was 0.8%, down from 1% in the fourth quarter of 2023 and below expectations of 0.9%.
Australia’s employment report will be released next. The Australian economy is estimated to have added 23,700 jobs after shedding 6,600 jobs in March. The unemployment rate is expected to rise to 3.9% from 3.8% previously.
