Rising Australia Consumer Price Index (CPI) to Buoy AUD/USD Outlook

Australia Consumer Price Index (CPI) to Expand Annualized 2.2%- Highest Reading Since 2014.

Core Rate of Inflation to Slow from Fastest Pace of Growth Since 2015.

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Trading a News: Australia Consumer Price Index (CPI)

Australia CPI

A fourth uninterrupted boost in Australia’s Consumer Price Index (CPI) might hint a bullish greeting in AUD/USD as it puts vigour on a Reserve Bank of Australia (RBA) to lift a money rate off of a record-low.

Why Is This Event Important:

The RBA might continue to change a balance as executive bank officials foresee ‘a neutral favoured money rate of around 3½ per cent,’ and Governor Philip Lowe and Co. might start to ready Australian households and business for aloft borrowing-costs as ‘the information accessible for a Jun entertain had generally been positive.’ However, another array of churned information prints might drag on a Australian dollar as it encourages a RBA to safety a stream process via 2017.

Impact Australia CPI news has had on AUD/USD during a final release

1Q 2017 Australia Consumer Price Index (CPI)

AUD/USD 10-Minute Chart

AUD/USD Chart

DailyFX 3Q Forecasts Are Now Available

Australia’s Consumer Price Index (CPI) climbed an annualized 2.1% after expanding 1.5% during a final three-months of 2016, while a core rate of acceleration increasing 1.9% during a same duration amid forecasts for a 1.8% print. Signs of slower-than-expected acceleration might inspire a Reserve Bank of Australia (RBA) to safety a record-low money rate for a foreseeable destiny as ‘indicators of domicile expenditure had been a small weaker than expected, that was unchanging with softer conditions in a work market.’ Despite a stickiness in a core rate, a Australian dollar mislaid belligerent following a CPI report, with AUD/USD slipping subsequent a 0.7500 hoop to finish a day during 0.7472.

How To Trade This Event Risk(Video)

Bullish AUD Trade: Australia 2Q CPI Climbs Annualized 2.2% or Greater

  • Need a green, five-minute candle following a news to cruise a prolonged AUD/USD position.
  • If a marketplace greeting favors a bullish aussie trade, buy AUD/USD with dual apart lots.
  • Set stop during a near-by pitch low/reasonable stretch from entry; demeanour for during slightest 1:1 risk-to-reward.
  • Move stop to breakeven on remaining position once initial aim is met, set reasonable limit.

Bearish AUD Trade: Headline Core Inflation Disappoint

  • Need a red, five-minute candle to preference a brief aussie position.
  • Implement a same setup as a bullish AUD trade, only in reverse.

Potential Price Targets For The Release

AUD/USD Daily

AUD/USD Daily Chart

Chart – Created Using Trading View

  • Broader opinion for AUD/USD has perked adult as it breaks out of a downward trend from 2016, with a span during risk of fluctuating a allege from progressing this month as a Relative Strength Index (RSI) sits in overbought domain for a initial time given 2014.
  • Topside targets sojourn on a radar as prolonged as a RSI binds above 70, with a subsequent topside jump entrance in around 0.8020 (38.2% expansion) followed by a 0.8150 (100% expansion) zone, that sits only subsequent a May 2015-high (0.8163).
  • Interim Resistance: 0.8270 (38.2% retracement) to 0.8295 (2015-high)
  • Interim Support: 0.7720 (23.6% retracement) to 0.7740 (78.6% expansion)

AUD Sentiment

Track Retail Sentiment with a New Gauge Developed by DailyFX Based on Trader Positioning

Retail merchant information shows 25.8% of traders are net-long AUD/USD with a ratio of traders brief to prolonged during 2.88 to 1. In fact, traders have remained net-short given June 04 when AUD/USD traded nearby 0.74387; cost has changed 6.8% aloft given then. The series of traders net-long is 7.3% reduce than yesterday and 4.6% reduce from final week, while a series of traders net-short is 1.2% reduce than yesterday and 2.1% aloft from final week.

— Written by David Song, Currency Analyst

To hit David, e-mail dsong@dailyfx.com. Follow me on Twitter during @DavidJSong.

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