Australian dollar traders are preparing for a lively first session of the day tomorrow, with key quarterly CPI data due out from the Australian Bureau of Statistics. The market has been awaiting this number keenly over the last few weeks and months after the Reserve Bank has flip-flopped on forward guidance with regard to its next rate cut. The market is strongly pricing in a rate cut in August, but a strong print in the CPI could see those expectations change quickly, especially after last month’s surprise hold.
Expectation is for the headline quarterly number to show a 0.8% increase, with the year-on-year remaining steady at +2.1%. The trimmed mean, which is closely monitored by economists, is expected to show a 0.7% quarter-on-quarter increase as well, and any significant differentiation from expectations could see some strong moves in the Aussie dollar.
The Aussie saw a good move off recent highs last night in line with the stronger US dollar and is now sitting on key trendline support on the daily charts. A stronger print in the CPI numbers would see the Aussie rally and move back towards recent annual highs, with a break there likely to lead to a swift move to 67 cents. However, weaker numbers would see a strong break of the support levels and open up a deeper move south, as the market prices in further rate cuts before the end of the year.
Resistance 2: 0.6624 – 2025 High
Resistance 1: 0.6612 – Trendline Resistance
Support 1: 0.6501 – Trendline Support
Support 2: 0.6370 – June Low
