When is Aussie CPI and how ill it affect AUD/USD?

Australia’s critical first quarter Consumer Price Index data is due today at 0130 GMT. The Australian central bank has dropped its patient stance and announced monetary policy would be data-dependent. Australian quarterly inflation is expected to surpass the upper end of the RBA’s target.

Analysts at Westpac said ''the surge in dwelling purchase prices is expected to play an important role given the conclusion of grants.''

''Auto fuel and food prices are also likely to make a strong contribution.''

Westpac forecasts a 2.0% quarter (QoQ) and 4.9% yearly YoY) lift for the headline CPI (market median 1.7% and 4.6%).

''The ongoing disruptions to supply lines and the robust strength of domestic demand reflect more broad-spread inflationary pressures, thereby supporting a 1.2% QoQ (3.4%YoY) gain in the trimmed mean measure (in line with median),'' the analysts added. 

NAB analysts said that they expect to see 1.2% QoQ in the trimmed mean and 3.4% YoY. 3.4% as a post-2009 high, above the top of the RBA's 2-3% band.

Meanwhile, analysts at ANZ Bank expect Australian Q1 headline inflation of 1.8% QoQ, taking annual inflation to 4.7% –its highest rate since the September quarter of 2008.

''The jump is not just about higher petrol and food prices,'' the analysts argued. 'Trimmed mean inflation is expected to come in at 1.1% QoQ and 3.4% YoY. This will be the first time core inflation has been above the top of the RBA’s target band since Q1 2010.''

''Despite this we continue to expect the RBA to wait until June before lifting the cash rate target, with the minutes from the RBA Board’s April meeting indicating that the board would like to see both inflation and wage data before a decision is made.''

How might CPI affect AUD/USD?

The AUD/USD pair is technically bearish, although upbeat inflation figures could trigger a recovery. AUD/USD failed to perform overnight and was trapped below an hourly resistance, sinking to the downside on US dollar strength. 

However, the price could be due for a correction in the daily chart and the above analysis illustrates the upside structure target areas for a retracement. A surprise result in the data to the upside would likely support the thesis and propel the bulls into action. If, on the other hand, the data fails to cement prospects of a nearer-term rate hike from the RBA, then the Aussie would be expected to come under pressure and break down the barriers for a test of 0.71 the figure before 0.7080/90 early Feb 2022 territories. 

About CPI

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 purchase power of AUD is dragged down by inflation. The CPI is a key indicator to measure inflation and changes in purchasing trends. A high reading is seen as positive (or bullish) for the AUD, while a low reading is seen as negative (or Bearish).