Aussie CPI - what to expect in AUD/USD?

Ross J Burland FXStreet

Currently, AUD/USD is trading at 0.7644, down -0.02% on the day, having posted a daily high in early Asia at 0.7651 and low at 0.7641, consolidated ahead of the key CPI event today having recovered from overnight lows of 0.7618.

Markets are awaiting to see whether or not the RBA's wait and see mode is going to continue into the first quarter of 2017 based on this result. Australia's Consumer Price Index (CPI) was a concern when it slowed more-than-expected in the second-quarter. The headline data dropped to 1.0% from 1.3% during the first quarter although the core rate of inflation remained robust at the annualized rate of 1.7% for another straight quarter, although a combination of the two weighed on the Aussie as the RBA's target of between 2-3% was well off and the Aussie as a result dropped below the the 0.7500 handle within the rising 2016 trend.

This is going to be a very important set of data for the RBA this time around as it could determine whether they need to act vrs a low inflationary environment below their preferred bracket of inflation target between 2-3%. The general consensus is for Q3 CPI to uptick for the first time since 4Q 2015 while the core rate of inflation is expected to hold steady at an annualised 1.7% for the third consecutive quarter. However, analysts at Westpac for Australian Q3 CPI are expecting a 0.9% qoq rise in headline inflation on food; utilities and seasonality. "The core measure should remain benign at 0.4% qoq, 1.6% yoy."

AUD/USD outlook on CPI:

Analysts at Westpac explained that the rising commodity prices and their expectation of an above-consensus CPI should see the AUD higher, above 0.7650 towards the 0.7700 area.

AUD/USD levels

Meanwhile, with spot trading at 0.7645, we can see next resistance ahead at 0.7646 (Daily Open), 0.7651 (Daily High), 0.7657 (Yesterday's High), 0.7668 (Daily Classic R2) and 0.7692 (Daily Classic R3). Support below can be found at 0.7642 (Weekly Classic PP), 0.7641 (Daily Low), 0.7639 (Daily Classic R1), 0.7637 (Hourly 100 SMA) and 0.7636 (Hourly 20 EMA).

Westpac's AUD/USD 1-3 month: "While further gains to around 0.77 are possible during the month ahead, driven in part by the faltering US dollar and yield-chasing flows, the AUD is losing energy (perhaps a reflection of its declining yield advantage). By year end, there’s a case for a correction towards 0.74 if the Fed tightens in December as we expect. (13 Sep)."

1 Week
1 Month
1 Quarter

1 Week

Avg Forecast 0.7546

12% Bullish
62% Bearish
25% Sideways

Bias Bearish

1 Month

Avg Forecast 0.7493

17% Bullish
67% Bearish
17% Sideways

Bias Bearish

1 Quarter

Avg Forecast 0.7427

17% Bullish
61% Bearish
22% Sideways

Bias Bearish

Author

Ross J Burland

FXStreet

Ross J Burland, born in England, UK, is a sportsman at heart. He played Rugby and Judo for his county, Kent and the South East of England Rugby team.

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