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

Overview

Australia’s monthly release of the Consumer Price Index (CPI) for July, 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 recently hawkish comments from the Reserve Bank of Australia (RBA) Governor-Designate Michelle Bullock.

It’s worth noting that markets expect CPI to ease to 5.2% YoY from 5.4% prior. Additionally, Australia Building Permits for July and the second quarter (Q2) Construction Work Done also become important to determine near-term AUD/USD moves.

Given the downbeat forecasts, as well as the pre-data anxiety, the AUD/USD may witness a pullback in the prices.

Ahead of the release, Analysts at ANZ expect the CPI to rise by 5.5% y/y in July versus market expectations of 5.2% y/y.

On the same line, FXStreet’s Valeria Bednarik notes, "Inflation can surprise amid a change in the calculation, while the RBA can follow suit with its new Governor."

How could AUD/USD react to the news?

AUD/USD seesaws at the weekly high around 0.6480 after posting the stellar run-up on downbeat US data. That said, the hawkish comments from Reserve Bank of Australia (RBA) Governor-Designate Michelle Bullock also favor the Aussie pair buyers as markets brace for the key Australia inflation data, as well as the US numbers about inflation, employment and the growth.

That said, the market players’ downbeat expectations contrast with the previously positive signals for Aussie inflation 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 the scheduled US data fuel the hawkish Fed bias.

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, A daily closing beyond the six-week-old falling resistance line, around 0.6430 by the press time, keeps the AUD/USD pair buyers hopeful.

Key notes

AUD/USD bulls cheer softer US data to approach 0.6500, Australia inflation eyed 

AUD/USD Forecast: Aussie looking at 0.6500 while above 0.6420

Australian Inflation Preview: Surprises in Monthly Consumer Price Index to rock the Aussie

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.