Home AUD/USD: Trading the Australian CPI Apr 2015

AUD/USD: Trading the Australian CPI Apr 2015

The 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 1:30 GMT.

Indicator Background

Analysts consider CPI one of the most important economic indicators, and the release of the Australian CPI can have a significant effect on the direction of AUD/USD.

CPI has been in a downspin, and the Q4 report came in at 0.2%, compared to 0.5% in the previous quarter. This is certainly a cause for concern. The downward trend is expected to continue in the Q1 release, as the forecast stands at 0.1%.

Sentiments and levels

AUD/USD pushed higher last week, as the greenback had a dismal  week against its rivals.  However, the pair has  lost ground at the start of the week. Market sentiment remains high over the US economy, and  a few strong  US  releases could quickly erase last week’s poor performance by the US dollar. The RBA wants to see an exchange rate  closer to  75 cents, so we can expect  the central bank to  continue to “talk down” the pair. A rate cut is not expected in the next little while, but  remains a distinct possibility. So, the overall sentiment is bearish on AUD/USD towards this release.

Technical levels, from top to bottom: 0.8077, 0.7978, 0.7799, 0.7692, 0.7528, and 0.7403.

5 Scenarios

  1. Within expectations: -0.2% to +0.2%. In this scenario, AUD/USD could show some slight fluctuation, but it is likely to remain within range, without breaking any levels.
  2. Above expectations: 0.3% to 0.7%: A stronger reading than predicted could push the pair above one resistance line.
  3. Well above expectations: Above 0.7%: An unexpectedly sharp rise in inflation could push AUD/USD upwards, with two or more lines of resistance at risk.
  4. Below expectations: -0.5% to -0.1%: A reading in negative territory could pull the pair downwards, with one support level at risk.
  5. Well below expectations: Below  -0.5%: A sharp decline in inflation could result in the pair breaking below two or more support levels.

For more on the Aussie, see the AUD/USD forecast.

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Kenny Fisher

Kenny Fisher

Kenny Fisher - Senior Writer A native of Toronto, Canada, Kenneth worked for seven years in the marketing and trading departments at Bendix, a foreign exchange company in Toronto. Kenneth is also a lawyer, and has extensive experience as an editor and writer.