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 1:30 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 edged lower to 0.4% in Q4, within expectations. The markets are expecting the downswing to continue in Q1, with the estimate standing at 0.2%.
Sentiments and levels
US employment numbers continue to impress, and if inflation levels pick up, a June rate hike is a serious possibility. With the RBA still talking about a rate cut, monetary divergence favors the US dollar. So, the overall sentiment is bearish on AUD/USD towards this release.
Technical levels, from top to bottom: 0.7886, 0.7798, 0.7692, 0.7597, 0.7438, and 0.7334.
5 Scenarios
- Within expectations:-0.1% to +0.5%. In this scenario, AUD/USD could show some slight fluctuation, but it is likely to remain within range, without breaking any levels.
- Above expectations: 0.6% to 1.0%: A stronger reading than predicted could push the pair above one resistance line.
- Well above expectations: Above 1.0%: An unexpectedly sharp rise in inflation could push AUD/USD upwards, with two or more lines of resistance at risk.
- Below expectations: -0.2% to -0.6%: A weak reading could see the pair break below one support level.
- Well below expectations: Below -0.6%: A reading deep in negative territory could result in AUD/USD breaking below two or more support levels.
For more on the Aussie, see the AUD/USD forecast.
Share
