AUD/USD Market Bullish Awaiting Australian CPI

• The AUD/USD pair receives support as it approaches the resistance at 0.6720.
• Traders will look to the Australian CPI as a possible catalyst.

The pair AUD/USD It is up 0.75% on the day, after rising from a low of 0.6644 and hitting a high of 0.6710 on Tuesday. Risk appetite is supporting high beta currencies such as the Aussie. Investors have taken solace in First Citizens BancShares’ agreement to buy all of the bankrupt Silicon Valley Bank’s deposits and loans.

US regulators said on Monday they would back a deal for regional lender First Citizens BancShares to acquire failed Silicon Valley Bank, dealing an estimated $20 billion hit to a government-run insurance fund. First Citizens shares rose more than 53% in trading Monday on Wall Street.

The package includes the purchase of approximately $72 billion in assets from the SVB at a discount of $16.5 billion, but about $90 billion in stocks and other assets will remain “in receivership for disposal by the FDIC.” “In addition, the FDIC has received common stock appreciation rights of First Citizens BancShares, Inc, Raleigh, North Carolina, with a potential value of up to $500 million,” the FDIC said in a posting.

Australian CPI in the spotlight

In Australia, meanwhile, February’s Consumer Price Index will steal the spotlight after the Reserve Bank of Australia flagged it as a key input for its April policy decision, analysts at TD Securities said.

We expect CPI inflation to continue declining to 7% yoy in February from 7.4% last month, with a reaffirmation of the RBA’s view that inflation likely peaked in the fourth quarter of last year. Our below-consensus forecast is due to the large seasonal decline in recreational services (eg travel prices), partly offset by strong increases in education and transportation prices. We continue to have a 25 basis point hike forecast for the April meeting as inflation remains well above the RBA’s inflation target and central banks such as the ECB and Fed have gone ahead with hikes to despite recent financial volatility.