Australian CPI (Consumer Price Index), which is released each quarter, measures the change in the price of goods and services charged to consumers. A reading which is higher than the market forecast is bullish for the Australian dollar.
Here are all the details, and 5 possible outcomes for AUD/USD.
Published on Wednesday at 00:30 GMT.
Indicator Background
Analysts consider CPI one of the most important economic indicators, and an unexpected reading from Australian CPI can quickly affect the direction of AUD/USD.
The CPI posted a gain of 0.5% in Q3, shy of the estimate of 0.7%. This was also lower than the Q2 release of 0.7%. The markets are expecting the downswing to continue in Q4, with the estimate standing at 0.3%.
Sentiments and levels
The recent rush away from risky currencies like the Aussie towards the safe-haven US dollar has abated for now. Will AUD/USD continue to rally? Last week’s inflation and employment numbers disappointed, and this may have put a March rate hike on hold. Still, the US economy remains solid and sentiment towards the US dollar is strong. So, the overall sentiment is bearish on AUD/USD towards this release.
Technical levels, from top to bottom: 0.7284, 0.71, 0.70, 0.6899, 0.6775, and 0.6686.
5 Scenarios
- Within expectations: 0.0% to 0.6%. In this scenario, AUD/USD could show some slight fluctuation, but it is likely to remain within range, without breaking any levels.
- Above expectations: 0.7% to 1.1%: A stronger reading than predicted could push the pair above one resistance line.
- Well above expectations: Above 1.1%: An unexpectedly sharp rise in inflation could push AUD/USD upwards, with two or more lines of resistance at risk.
- Below expectations: -0.5% to -0.1%: A reading in negative territory could pull the pair downwards, with one support level at risk.
- Well below expectations: Below -0.5%: A very poor reading could result in AUD/USD breaking below two or more support levels.
For more on the Aussie, see the AUD/USD forecast.
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