Upbeat Australia 1Q Consumer Price Index (CPI) to Curb AUD/USD Losses

Australia CPI to Climb Annualized 2.2%- Fastest Pace of Growth Since 3Q 2014.

Core Inflation to Rebound from 1.6%- Lowest Reading Since a Series Began in 1983.

Trading a News: Australia Consumer Price Index (CPI)

DailyFX Calendar

A element pickup in Australia’s title and core Consumer Price Index (CPI) might change a financial process opinion and worsen a seductiveness of a aussie should a information prints put vigour on a Reserve Bank of Australia (RBA) to start normalizing financial policy.

Why Is This Event Important:

Signs of worsening cost pressures might pull a RBA to change a balance over a entrance months, and a executive bank might uncover a larger eagerness to pierce divided from a easing-cycle as acceleration approaches a 2% to 3% aim band. However, a RBA might continue to validate a wait-and-see proceed during a Apr 4 assembly as a executive bank warns ‘global acceleration had increased, driven by a arise in oil prices over 2016,’ and Governor Philip Lowe and Co. might keep a record-low money rate via 2017 as ‘wage enlargement and broader measures of work cost pressures remained subdued.’

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Expectations: Bullish Argument/Scenario

Improved certainty accompanied by a ongoing enlargement in Australia’s labor marketplace might beget a stronger-than-expected CPI print, and a certain expansion might column adult AUD/USD as it encourages a RBA to normalize financial process progressing rather than later.

Risk: Bearish Argument/Scenario

However, Australian firms might offer ignored prices amid a slack in private-sector consumption, and another below-forecast reading might coax a bearish greeting in a aussie as it drags on interest-rate expectations.

How To Trade This Event Risk(Video)

Bullish AUD Trade: Headline Core Inflation Picks Up in 1Q 2017

  • Need a green, five-minute candle following a CPI news to cruise a prolonged AUD/USD trade.
  • If marketplace greeting favors a bullish aussie position, 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: Australia CPI Report Continues to Disappoint

  • Need red, five-minute candle to preference a brief aussie position.
  • Carry out 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 stays comparatively prosaic as a span preserves a operation from 2016, though a span might continue to give behind a allege from progressing this year following a unsuccessful try to exam a Dec high (0.7778); a Relative Strength Index (RSI) also highlights a identical energetic and keeps a near-term disposition slanted to a downside as it preserves a bearish arrangement carried over from February, with a initial downside area of seductiveness entrance in around 0.7500 (50% retracement) followed by 0.7450 (38.2% retracement).
  • Interim Resistance: 0.7730 (61.8% retracement) to 0.7770 (61.8% expansion)
  • Interim Support: 0.7150 (161.8% expansion) to 0.7180 (61.8% retracement)

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Impact that Australia CPI report has had on AUD/USD during a prior release

4Q 2016 Australia Consumer Price Index (CPI)

AUD/USD 10-Minute

AUD/USD Chart

Australia’s Consumer Price Index (CPI) climbed an annualized 1.5% during a final three-months of 2016 after expanding 1.3% in a third-quarter, while a core rate of acceleration narrowed to 1.6% from 1.7% during a same period. The softer-than-expected CPI news might inspire a Reserve Bank of Australia (RBA) to keep a executive money rate during a record-low via 2017 as a executive bank warns ‘the arise in underlying acceleration is approaching to be a bit some-more light with enlargement in work costs remaining subdued.’ The Australian dollar struggled to reason a belligerent following a release, though a marketplace greeting was short-lived, with AUD/USD convalescent a balance during a day to tighten during 0.7571.

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— Written by David Song, Currency Analyst

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

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