AUD/USD has stopped the rot after falling nearly 4.4% from last month's high, and the RBA's upgrades to its employment and inflation projections nRUA3GEE2G raise the stakes for anyone betting on further losses now.
Bears seem reluctant to move forward even as U.S. yields and the greenback reverse losses incurred after the jobs report. The nearby 50% Fib of the 2016-18 rally at 0.7482 presents them with a key obstacle.
The RBA's inflation upgrade to 2.0 from 1.75 percent garners particular attention, especially after Lowe recently said wage growth will be a major factor determining rate decisions.
This puts Australia's Q1 wage data due on May 16 in the spotlight.
Wage growth declines appear to have to have based at 1.9 percent in 2016, rising to 2.1 percent by Q4 2017. If Q1 data shows accelerating wage growth, the RBA could take a more hawkish stance, which would move market expectations for rate hikes nearer. That could lift AUD/USD by encouraging shorts to cover and inspiring new longs.
Tests of the 200-Day SMA and April's high might then follow.
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