Home AUD/USD: Trading the Australian CPI

AUD/USD: Trading the Australian CPI

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.

CPI dropped to 0.5% in Q4, missing the estimate of 0.7%. The forecast for Q1 is expected to edge up to 0.6%.

Sentiments and levels

The US economy is doing well, but the markets are not impressed with Trump’s first 100 days in office. Stronger global demand has boosted demand for Australian products, but US protectionism remains a serious risk. So, the overall sentiment is neutral on AUD/USD towards this release.

Technical levels, from top to bottom: 0.7835, 0.7741, 0.7605, 0.7513, 0.7429 and 0.7311

5 Scenarios

  1. Within expectations: 0.1% 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 1.6%: A stronger reading than predicted could push the pair above one resistance line.
  3. Well above expectations: Above 1.6%: An unexpectedly sharp rise in inflation could push AUD/USD upwards, with two or more lines of resistance at risk.
  4. Below expectations: -0.4% to 0.0%: A weak reading could see the pair break below one support level.
  5. Well below expectations: Below -0.4%: In this scenario, AUD/USD could break 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.