Australian CPI (Consumer Price Index), which is released each quarter, is an inflation index which 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 release can have a significant impact on the direction of AUD/USD.
CPI for Q2 came in at 0.7%, the highest gain since Q4 of 2013. The estimate for Q3 stands at 0.7%.Will the index match or beat this prediction?
Sentiments and levels
Although the Fed stayed on the sidelines in September, a rate hike is still a possibility before the end of the year. Monetary divergence clearly favors the US dollar, and the Australian economy continues to struggle with weaker demand from China, Australia’s largest trade partner. So, the overall sentiment is bearish on AUD/USD towards this release.
Technical levels, from top to bottom: 0.7664, 0.7440, 0.7284, 0.7213, 0.7160, and 0.71.
5 Scenarios
- Within expectations: 0.4% to 1.1%. In this scenario, AUD/USD could show some slight fluctuation, but it is likely to remain within range, without breaking any levels.
- Above expectations: 1.2% to 1.5%: A stronger reading than predicted could push the pair above one resistance line.
- Well above expectations: Above 1.5%: An unexpectedly sharp rise in inflation could push AUD/USD upwards, with two or more lines of resistance at risk.
- Below expectations: 0.0% to 0.3%: A lower than expected reading could pull the pair downwards, with one support level at risk.
- Well below expectations: Below 0.0%: A reading in negative territory could result in the pair breaking two or more support levels.
For more on the Aussie, see the AUD/USD forecast.
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