Home AUD/USD: Trading the Australian CPI Oct 2015

AUD/USD: Trading the Australian CPI Oct 2015

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

  1. 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.
  2. Above expectations: 1.2% to 1.5%: A stronger reading than predicted could push the pair above one resistance line.
  3. 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.
  4. Below expectations: 0.0% to 0.3%: A lower than expected reading could pull the pair downwards, with one support level at risk.
  5. 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.

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.