AUDUSD Breaks Higher as Inflation Rises

Monetary policy is a major cause of the increase in inflation, says Stanford economist John Taylor. The Australian Dollar catapulted to a 5-month high above 0.6900 on 9th Jan on the back of the US Dollar being crunched. The ‘big dollar’ is down against all the major currencies. Treasuries gave up notable yield from the 2-year note and beyond.

This move higher comes as CPI figures, set to be released on Wednesday, are expected to show an increase in inflation from 6.9% to 7.2%.

This increase in inflation could be a contributing factor to the AUDUSDs recent strength, as rising inflation can lead to an increase in interest rates, which can in turn make a currency more attractive to investors.

As the AUDUSD continues to push higher, the next target for price will be the 0.7100 August 2022 highs. This level was previously reached in August of 2022, but the price fell 800 pips from this point. If the AUDUSD can break through this resistance, it could signal further gains in the future.

Overall, the combination of risin

Above and strong technical gains make the AUDUSD an interesting pair to watch in the coming weeks.