AUD/USD trims yesterday’s gains after below forecast February CPI cements case for RBA pause next Tuesday. Nonetheless, economists at Société Générale expect the Aussie to edge higher over the medium-term.

Increased likelihood of a pause by the RBA next week and stymies support for the AUD

“In Australia, CPI surprised to the downside after slowing to 6.8% yoy in February, the lowest since last June. The decline was led mainly by housing, transport, recreation and culture. This increases the likelihood of a pause by the RBA next week and stymies support for the AUD.”

“Valuations, optimism over the Chinese economy and peak in US rates suggest AUD/USD should strengthen over the medium-term.”