Home AUD/USD: Trading the Australian CPI Jan 2015

AUD/USD: Trading the Australian CPI Jan 2015

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 00:30 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 posted a gain of 0.5% in Q3, shy of the estimate of 0.7%. This  was  also lower than the  Q2 release  of  0.7%. The markets are expecting the downswing to continue in Q4, with the estimate standing at 0.3%.

Sentiments and levels

The recent rush away from risky currencies like the  Aussie  towards the safe-haven US dollar has abated for now. Will  AUD/USD continue  to rally?  Last week’s  inflation and employment numbers  disappointed, and this may have put a March rate hike on hold. Still,  the US economy remains solid and sentiment towards the US dollar is strong. So, the overall sentiment is bearish on AUD/USD towards this release.

Technical levels, from top to bottom: 0.7284, 0.71, 0.70, 0.6899, 0.6775, and 0.6686.

5 Scenarios

  1. Within expectations: 0.0% to 0.6%. 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: 0.7% to 1.1%: A stronger reading than predicted could push the pair above one resistance line.
  3. Well above expectations: Above 1.1%: 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  very poor reading  could result in AUD/USD  breaking below  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.