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

Australian CPI overview

The Australian Q1 CPI report is scheduled for release tomorrow at 1230GMT. This report is a major event for the Aussie and related markets as a key contributing factor to the RBA's monetary policy decisions. 

With the monthly trimmed mean results from Jul-Sep averaged at 2.4%/yr, CPI today is expected to fall in at 2.0% y/y (Q3). But, underlying inflation reaching 2%, after 18 months below the RBA’s 2-3% target band, is already consistent with the RBA’s August projections. 

"We suspect that the RBA wants to see inflation actually printing closer to mid-target before switching to a more hawkish tone, i.e. February 2018 at the earliest," argued analysts at TD Securities: "If underlying inflation merely edges up to 2%/yr, we don’t expect the report to have a material impact on RBA thinking."

How could CPI affect AUD/USD today?

"However, an upside surprise towards say 2.2%/yr, combined with much stronger employment over this year, can potentially provide a significant tailwind for the AUD, back towards $US0.788, and bring forward the first hike in the OIS strip, currently not priced for +25bp until October 2018," the analysts explained further. 

Key notes:

AUD/USD continues slide ahead of key inflation data

About Australia 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 trimmed mean is calculated as the weighted mean of the central 70% of the quarterly price change distribution of all CPI components, with the annual rates based on compounded quarterly calculations.