Australian dollar traders are anticipating a busy morning on Wednesday with key inflation numbers due to be released from the Australian Bureau of Statistics early in the trading day. After this month’s interest rate cut from the Reserve Bank of Australia, investors and households alike will be hoping for more cuts in the coming months, and this CPI data print could be crucial to that. The Reserve Bank has been clear over the course of the year that it wants to keep inflation under control and wants to see it back towards its 2–3% target range.
Market expectation is for the headline year-on-year number to come in at a 2.3% increase, and even though that is in the target range, it is substantially higher than the last 1.9% print. Anything ±0.2% off that 2.3% forecast is likely to see big moves in the currency.
The AUDUSD is again sitting just under the 65-cent level and has been moving in line with the US dollar’s fortunes in the last few sessions; however, the CPI number should see moves on the back of domestic considerations. Anything lower should see a move back down to challenge recent lows just above 0.6400, whereas a much stronger-than-expected print probably represents the greater risk and could see a break above recent highs and a challenge of the longer-term daily trendline resistance level.
Resistance 2: 0.6588 – Trendline Resistance
Resistance 1: 0.6568 – August High
Support 1: 0.6412 – Trendline Support and August Low
Support 2: 0.6370 – June Low
