When is Aussie CPI and how might AUD react?

  • Australia's third-quarter Consumer Price Index is on the slate for today. 
  • Barring any major surprises in today's data, it is doubtful that the AUD will react fiercely.

The headline inflation is expected to bounce back to 1.6% on the quarter, with child care and petrol the main drivers, and trimmed mean inflation to come in at 0.4% Q/Q, as forecasted by analysts at ANZ bank.

''This would leave the annual rate unchanged at 1.2%, well outside the RBA’s target band.''

Meanwhile, the market and analysts at Westpac expect a just 1.5% number and 1.1% jump respectively (prior: -1.9%). 
The analysts at Westpac said that the trimmed mean should see a flat result, however, with rents and the HomeBuilder grant weighing, and inflation elsewhere restricted by narrowly-focused consumption.

In other analysis, analysts at TD Securities are expecting a bounce in headline CPI on the unwind of the full government childcare subsidy, the rise in fuel as crude rebounded and removal of free before and after school care while falling rents serve as a drag. 

Meanwhile trimmed mean inflation is expected to remain at 1.2% YoY, well below the RBA's 2-3% target band. 

Implications for AUD

The Aussie has been pressured of late with increasing positioning on the offer with expectations that the Reserve Bank of Australia will need to cut interest rates sooner than later. 

Indeed, the idiosyncratic downside risks to the currency remain rather significant.

Markets are retaining a very bearish stance which may put a ceiling on further AUD gains and a weak print today will potentially hurt the currency. 

However, this falls on a week where Chinese leaders will meet to set out their 5-year plan.

With a focus on improving self-sufficiency, there is quite a lot at stake for Australian exports and AUD may face some supply as a result. 

So, barring any major surprises in today's data, it is doubtful that the AUD will react fiercely to the release with a higher focus on jobs numbers and November's decision will unlikely be heavily influenced by the CPI reading.

  • AUD/USD technical analysis

AUD/USD Price Analysis: Bounded by support and resistance, watch for breakout

Description of the Consumer Price Index

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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