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.
Indicator Background
Analysts consider CPI one of the most important economic indicators, and the release of the Australian CPI can affect the direction of AUD/USD. If inflation is considered too high or too low, the central bank may intervene by adjusting interest rates, which will affect the Australian dollar.
The CPI reading for Q4 was a respectable 0.8%, beating the estimate of 0.5%. The markets are expecting another gain of 0.8% for the Q1 reading. Will the indicator repeat and beat the market prediction?
Sentiments and levels
AUD/USD continues to trade at high levels, despite remarks from the RBA that the Aussie is too high for its liking. The US dollar has been under pressure after dovish comments from Janet Yellen about the health of the US economy, but US employment numbers have been solid, boosting the likelihood of another QE trim at the end of April, which is a dollar-positive event .Thus, the overall sentiment is neutral on AUD/USD towards this release.
Technical levels, from top to bottom: 0.9526, 0.9442, 0.9368, 0.9283, 0.9180, and 0.9000.
5 Scenarios
Within expectations: 0.5% 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 1.6%: A stronger reading than predicted could push the pair above one resistance line.
Well above expectations: Above 1.6%: An unexpectedly sharp rise in inflation could push AUD/USD upwards, with a second resistance line at risk.
Below expectations: 0.0% to 0.4%: 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 a second support level.
This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities.
Opinions are the authors — not necessarily OANDA’s, its officers or directors. OANDA’s Terms of Use and Privacy Policy apply. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.
Recommended Content
Editors’ Picks
EUR/USD eases to near 1.0850 on renewed USD strength
EUR/USD stays under modest bearish pressure, battling 1.0850 in the European session on Tuesday. The renewed USD strength weighs on the pair. ZEW sentiment survey will be featured in the European economic docket ahead of housing data from the US.
USD/JPY extends rally beyond 150.00 as markets assess BoJ decisions
USD/JPY preserves its bullish momentum after breaking above 150.00 with the 'sell the fact' reaction to the Bank of Japan's decision to end negative interest rates. In the post-meeting press conference, Governor Ueda said they will consider options for easing broadly, including ones used in the past if needed.
Gold price struggles to lure buyers, holds steady above one-week low ahead of FOMC meeting
Gold price ticks lower amid reduced Fed rate cut bets, elevated US bond yields and stronger USD. Geopolitical tensions could lend some support to the safe-haven XAU/USD and help limit losses.
Why is the crypto market crashing?
The two most important contribution to the ongoing bull market is the meteoric rise in Bitcoin due to the ETF approval and the sudden interest spike in Solana ecosystem. But the recent move suggests that the upward momentum is dissipating and a correction looms.
Canada CPI Preview: Inflation pickup could scale back bets on early interest-rate cut
The Canadian Consumer Price Index is expected to have risen by 3.1% YoY in February. The BoC shows no rush to lower its interest rate. The Canadian Dollar maintains its multi-day lows against the US Dollar around 1.3540.