When is Australia inflation data and how could it affect AUD/USD?

Overview

Australia’s quarterly release of the Consumer Price Index (CPI) for the second quarter (Q2) of 2023, scheduled for publishing on early Wednesday around 01:30 GMT, appears the crucial data for the AUD/USD pair traders to watch. Also increasing the importance of the time could be the quarterly release of the Reserve Bank of Australia’s (RBA) Trimmed Mean CPI and the Monthly CPI for June.

The reason could be linked to the RBA’s pause in the interest rate hikes after consecutive two hawkish surprises.

It’s worth noting that markets expect CPI to ease to 1.0% QoQ from 1.4% prior while the RBA Trimmed Mean CPI is likely to edge lower to 1.1% versus 1.2% previous readings. That said, the Monthly CPI is expected to drop to 5.4% YoY for June compared to 5.6% marked in May.

Given the downbeat forecasts, as well as the pre-Fed anxiety the AUD/USD bears flex muscles of late.

Ahead of the release, Analysts at ANZ state:

On the same line, FXStreet’s Valeria Bednarik notes,

How could AUD/USD react to the news?

AUD/USD takes offers to refresh intraday low near 0.6780, printing mild losses after rising in the last two consecutive days, the risk-negative headlines about China and cautious mood ahead of the Federal Open Market Committee (FOMC) monetary policy meeting announcements. Also challenging the Aussie pair buyers could be the downbeat forecasts for the Australian inflation data, which in turn flag fears of the dovish RBA move.

That said, the market players’ downbeat expectations contrast with the previously positive signals for Aussie inflation and keep the AUD/USD traders on a dicey floor. Hence, surprisingly upbeat Aussie inflation data won’t hesitate to bolster the hawkish RBA bets and propel the AUD/USD price. However, the run-up will also depend upon how well Fed Chair Jerome Powell manages to convince markets that the rate hike in July isn’t the last one.

As a result, upbeat data may only provide a knee-jerk reaction to the AUD/USD prices while defending the overall bearish trend unless marking a heavy positive surprise, which is less expected.

Technically, the AUD/USD pair’s repeated failures to provide a daily closing beyond a one-week-old descending resistance line, around 0.6800, as well as the double tops near the 0.6900 round figures, keep the bears hopeful amid sluggish MACD and RSI signals.

Key notes

Australian Inflation Preview: Consumer Price Index to ease just modestly 

AUD/USD Price Analysis: Holds gains but struggles at 0.6800, ahead of FOMC’s decision

About Aussie Consumer Price Index

The quarterly Consumer Price Index (CPI) published by the Australian Bureau of Statistics (ABS) has a significant impact on the market and the AUD valuation. The gauge is closely watched by the Reserve Bank of Australia (RBA), in order to achieve its inflation mandate, which has major monetary policy implications. Rising consumer prices tend to be AUD bullish, as the RBA could hike interest rates to maintain its inflation target. The data is released nearly 25 days after the quarter ends.