Australian consumer prices are released only once per month, making the publication a big commotion upon each release. This time was no different: consumer prices rose by 0.7% QoQ in Q3, higher than 0.5% expected. It was also more than 0.4% seen beforehand. Year over year, inflation advanced to 1.3%, greater than 1.1% predicted.
And the reaction was swift: AUD/USD jumped from 0.7630 to 0.7610, a leap of around 80 pips. Given new tighter ranges, this move is quite volatile.
However, the strength did not last too long: the rise is fueled by fuel: the most volatile items in the CPI caused the volatility: energy and food. When stripping them out, the underlying trend is more moderate. Trimmed Mean CPI, known as Core CPI in other countries, rose by only 0.4%. While this was within expectations, it was weaker than 0.5% seen in Q2. Year over year, it stands at 1.7%. It seems that most of the “blame” for the rise in prices is fruit and vegetable prices, which have pushed headline inflation higher.
At the time of writing, the pair clings onto the lion’s share of gains but looks at the 0.77 level from the other side. Support awaits at 0.76, followed by 0.7530 and 0.75. Resistance is at 0.7710 and 0.7740.
Get the 5 most predictable currency pairs