When Will the Australian Consumer Price Index Be Released and How Will It Affect the AUD/USD?

Today, at 0130 GMT, Australia's important first quarter Consumer Price Index data will be released. The Australian central bank has abandoned its patient attitude and declared that monetary policy will be data-driven. Quarterly inflation in Australia is projected to exceed the RBA's objective at the top end.

Westpac analysts stated that "given the conclusion of grants, the spike in house purchase prices is projected to play a significant influence."

"Automotive gasoline and food prices are also anticipated to play a significant role."

Westpac anticipates a 2.0 percent quarter-on-quarter (QoQ) and 4.9 percent year-on-year (YoY) increase in the headline CPI (market median 1.7 percent and 4.6 percent ).

"Continued disruptions to supply chains and the persistent strength of domestic demand imply more widespread inflationary pressures," the analysts wrote. "This supports a 1.2 percent QoQ (3.4 percent YoY) increase in the trimmed mean measure (in line with the median).

According to NAB analysts, they anticipate a 1.2 percent quarter-on-quarter increase in the trimmed mean and a 3.4 percent year-on-year increase in the trimmed mean. 3.4 percent as a post-2009 high, much over the RBA's 2-3 percent target range.

Meanwhile, ANZ Bank analysts forecast Australian Q1 headline inflation of 1.8 percent quarter on quarter, bringing annual inflation to 4.7 percent - the highest level since the September quarter of 2008.

"The increase is not just due to increasing gasoline and food prices," the researchers observed. 'Adjusted mean inflation is estimated to be 1.1 percent quarter on quarter and 3.4 percent year on year. This will be the first time since Q1 2010 that core inflation will exceed the top of the RBA's target zone."

"Despite this, we continue to expect the RBA to wait until June before raising the cash rate target, with the April meeting minutes indicating that the board would prefer to see both inflation and wage data before making a decision."

How Might CPI Affect the AUD/USD Exchange Rate?

Although the AUD/USD pair is technically bearish, positive inflation data could spark a recovery. The AUD/USD pair did not perform well overnight and was locked below an hourly barrier, sliding to the south on the strength of the US dollar.

However, the daily chart indicates that the price may be due for a correction, and the above analysis highlights the upside structure target areas for a retracement. A positive surprise in the data would almost certainly support the thesis and energise the bulls. If, on the other hand, the data fails to solidify the RBA's prospects for a near-term rate hike, the Aussie is projected to come under pressure and break through the barriers for a test of 0.71 before the 0.7080/90 early February 2022 areas.

Concerning the CPI

The Consumer Price Index, which is published by the Reserve Bank of Australia and republished by the Australian Bureau of Statistics, is a measure of price changes calculated by comparing the retail prices of a representative basket of goods and services. Inflation drags down the purchasing power of the AUD. The CPI is a critical indicator for determining inflation and changes in consumer spending trends. A positive (or bullish) value for the AUD is considered positive, while a negative reading is considered bad (or Bearish).