Morning Note: Aussie CPI Up Slightly; Canada GDP Looms; US PCE Watch

How Will Inflation Data Shape the RBA’s Rate Call?

Australia's inflation rate ticked up slightly in the March quarter, just weeks ahead of the Reserve Bank of Australia's (RBA) next interest rate decision. According to data released by the Australian Bureau of Statistics on Wednesday, the headline Consumer Price Index (CPI) rose 0.9% for the quarter, driven largely by the winding back of state energy subsidies. On an annual basis, headline inflation remained steady at 2.4%, unchanged from December 2024.
The trimmed mean CPI, the RBA’s preferred measure as it excludes volatile items, eased to 2.9% year-over-year, down from 3.3% in the previous quarter. This marks the lowest annual core inflation rate since December 2021, reinforcing the trend of gradual disinflation as monetary policy continues to weigh on household spending and demand.

(AUD/USD Daily Chart, Source: Trading View)

From a technical analysis perspective, the AUD/USD currency pair has been in a bearish trend since early October 2024, as evidenced by a series of lower highs and lower lows. However, strong bullish momentum has emerged since the beginning of April 2025, pushing the pair higher. It is now retesting the resistance zone between 0.6400 and 0.6440. A decisive breakout above this zone could signal a potential trend reversal from bearish to bullish, which may drive the pair further upward.

Investors Await Canada GDP Data

Canada’s GDP grew by 0.4% month-over-month in January, while the forecast for February is flat at 0.0%. This expected stagnation in February likely reflects temporary softness following January’s strong rebound, which was driven by favourable weather and rebounds in sectors like mining and manufacturing. However, early indicators suggest February faced headwinds, such as weaker retail activity and slower goods production, which may have offset prior gains. This data is set to be released today at 12:30 GMT.

(USD/CAD Daily Chart, Source: Trading View)

From a technical analysis perspective, the USD/CAD currency pair has been moving in a bearish trend since the beginning of February 2025, as indicated by the lower highs and lower lows. Recently, it broke below the swap zone of 1.3920 – 1.3950 with bearish momentum. However, if it can gain bullish momentum and close above the swap zone in the near term, it may potentially surge higher and retest the resistance zone of 1.4070 – 1.4100.

Will March Core PCE Support Fed's Stance?

The U.S. core PCE price index rose 2.8% year-over-year in February, with March’s reading expected to ease to 2.5%. This anticipated slowdown aligns with ongoing disinflation trends driven by easing supply chain pressures, cooling consumer demand, and tighter financial conditions from the Federal Reserve’s prolonged restrictive stance. Core PCE, the Fed’s preferred inflation gauge, is gradually drifting toward the 2% target, and the expected drop reflects base effects from last year’s elevated readings and some moderation in services inflation.

(U.S Dollar Index Daily Chart, Source: Trading View)

From a technical analysis perspective, the U.S. Dollar Index has been trending lower, as indicated by the formation of lower highs and lower lows. If it breaks above the swap zone of 99.30 – 99.60 in the near term, a move higher to retest the resistance area between 101.30 and 101.60 is possible. Conversely, if it faces rejection at the swap zone, the bearish trend may resume, potentially pushing the index even lower.

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