When is Aussie CPI and how might it affect AUD/USD?
|Australian CPI overview
The Australian Q1 CPI report is scheduled for release tomorrow at 0130GMT. This report is a major event for the Aussie and related markets as a key contributing factor to the RBA's monetary policy decisions.
"Westpac’s forecast is 0.6%qtr (same as consensus) lifting the annual pace to 2.3%yr from 1.5%yr. March is a seasonally softer quarter with the ABS seasonal factors boosting our seasonally adjusted estimate to 0.8%qtr. The core measures (trimmed mean, weighted median) are expected to be 0.1ppt lower," explained analysts at Westpac.
Essentially, the market expects that underlying inflation is likely to remain weak and below the RBA's target band while ongoing labour market softness will keep wages inflation contained. At the same time, the price of the Aussie will be keeping imported goods and services low.
How could CPI affect AUD/USD today?
AUD/USD has been consolidating at the mid point between the 12th April rally from 0.7470 to 0.7610 resistance and 17th April highs. The recent sell-off to 0.7520 from the April 19th's bullish correction to 0.7583 could gather momentum to the downside should the data come in below expectations, firming up the view that the RBA remains on hold for the remainder of 2017 and into early 2018, widening the divergence between the Fed and RBA even further. A break below 0.7520 targets 0.7505 and then 0.7490 ahead of 0.7470 and April lows. If the data comes in as expected or higher, the next 0.7560 and 0.7580. 0.7610 being the ultimate target on a strong risk-on rally.
Key notes:
"Potential government policies to tackle house price growth could impact rental growth going forward in both directions," explained analysts at NAB.
Australia's Q1 2017 CPI preview - NAB
About Australia CPI
The Consumer Price Index released by the RBA and republished by the Australian Bureau of Statistics is a measure of price movements by the comparison between the retail prices of a representative shopping basket of goods and services. The trimmed mean is calculated as the weighted mean of the central 70% of the quarterly price change distribution of all CPI components, with the annual rates based on compounded quarterly calculations.
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