Sean Callow, analyst at Westpac, points out that the Australia’s below-consensus inflation reading has stoked a fresh wave of pricing for RBA rate cuts.

“A cut to 1.25% had only been fully priced by the Oct 2019 meeting but after CPI it was priced by June, with the chance of a May cut – in the heat of the election campaign no less – around 2/3. The debate over the RBA policy outlook will dominate discussion near term, with little on Australia’s data calendar to provide fresh direction. This is likely to keep AUD/USD on the back foot in the week ahead. Adding to the pressure on AUD/USD in the week ahead should be a firmer US dollar, backed by upward revisions to US Q1 GDP forecasts (due Fri). But downside on the Aussie could be contained by a more positive global mood e.g. record highs for US equities and China’s stronger March data. The RBA will be making note of these developments too.”