AUD/NZD drops 30 pips as Aussie inflation disappoints RBA hawks

• AUD/NZD braces for the biggest daily loss in a week on downbeat Australia inflation.
• Australia’s Monthly CPI slumps to 6.8% YoY versus 7.1% expected and 7.4% prior.
• Cautious optimism puts a floor under the prices.
• Risk catalysts eyed for fresh impetus even as economic calendar becomes interesting.

AUD/NZD renews intraday low near 1.0690, marking a near 30-pip slump as Australia’s headline inflation data disappoints early Wednesday. As the downbeat Aussie Retail Sales also join the recently weaker Consumer Price Index (CPI) data, the increasing odds of the Reserve Bank of Australia’s (RBA) policy pivot keep bears hopeful.

That said, Australia’s Monthly Consumer Price Index dropped to 6.8% YoY in February versus 7.2% expected and 7.4% prior.

Also read: Aussie CPI misses expectationsa and AUD drops below 0.6700

Although the recent Aussie data favor bears, the market’s cautious optimism allows the AUD/NZD pair to check the bears before giving them control.

Behind the risk-on mood could be the receding fears of a banking crisis and hopes of less aggressive rate hikes from the top-tier central banks seem to gain the market’s attention. Also keeping the traders positive are chatters that the likely recession in some of the developed countries will be less severe than initially expected.

However, news that Australian Treasurer Jim Chalmers will convene a meeting of the country's top financial regulators to check how the latest volatility in global financial markets could affect the country, an official in the treasurer's office said on Tuesday per Reuters, prod the optimism. On the same line could be the much-debated $5.4 million Credit Default Swap (CDS) trade of Deutsche Bank. Furthermore, financial market regulators from the US and Europe also showed their dislike for the market’s curbs and raised fears of late.

While portraying the mood, US Treasury bond yields struggle to extend the two-day rebound but S&P 500 Futures print mild gains at the latest.

With the latest Aussie data raising fears of no rate hike from the Reserve Bank of Australia (RBA), AUD/NZD traders will be more interested in New Zealand’s housing market numbers and the ANZ sentiment figures ahead of China activity data for March. Should these numbers appear strong, the cross-currency pair may witness further downside.

Technical analysis

The AUD/NZD pair’s sustained bounces off a horizontal area comprising multiple levels marked since early December 2022, around 1.0660-75, join bullish MACD signals to tease buyers. However, the 21-DMA and the previous day’s Doji candlestick challenge the upside momentum. Furthermore, the steadily rising RSI (14) adds strength to the recovery.