Synopsis:

HSBC expects limited near-term traction for the Australian dollar (AUD) despite key domestic events ahead. With a Q1 CPI print due on April 30 and general elections on May 3, the AUD may remain range-bound unless surprises in data or central bank guidance shift expectations for the RBA’s terminal rate.

Key Points:

• CPI as Primary Focus:

  • Q1 CPI on April 30 is the main domestic driver.

  • If inflation data comes in line with expectations, the RBA is likely to cut rates at its May 20 meeting.

  • A 25bp cut is already more than fully priced, so AUD reaction may be muted unless guidance shifts market pricing for future cuts.

• Australian Election Seen as Low Impact:

  • The general election on May 3 is not expected to meaningfully affect the AUD.

  • All major parties appear likely to pursue fiscal easing, limiting differentiation in economic outlooks.

• FX Positioning and Market Tone:

  • AUD has already seen a strong recovery.

  • HSBC suggests further upside is limited and consolidation is the safer outlook into next week.

Conclusion:

With easing already priced and election risks seen as minimal, HSBC expects AUD to consolidate in the near term. Only a CPI surprise or unexpected RBA guidance could jolt the pair higher or lower.