Australia Q1 CPI

*(AU) AUSTRALIA Q1 CONSUMER PRICES (CPI) Q/Q: 0.5% V 0.6%E; Y/Y: 2.1% (highest since Q2 of 2014) V 2.2%E; TRIMMED MEAN Q/Q: 0.5% V 0.5%E ; Y/Y: 1.9% (5-quarter high) V 1.8%E- Prior Trimmed Mean q/q revised higher to 0.5% from 0.4% – Source

The Australia CPI came in below expectations, and the Aussie falls over 25 pips below .7520 in the first wave of stop losses. Given the FX  market was likely playing for a stronger print based on the New Zealand inflation correlations after last weeks higher NZ CPI, we could see some more selling. However, there has been a very tepid initial reaction on the rates markets suggesting this was priced into the result

Given a miss was not sufficient to warrant any change in the RBA natural stance and while we should expect the Aussie to remain offered, it’s unlikely we will make a serious test below .7500 in this near-term risk buoyant climate. The key, however, will be if the AUD closes below .7491 then bullish bets will likely further unwind from the failing technical picture.
Trader’s  will now pivot tot the current US administration narrative ( TAX, TRADE and Spend) while awaiting policy direction from this week’s ECB meeting and the key FOMC meeting next week.

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

Stephen Innes

Stephen Innes

Head of Trading APAC at OANDA
Stephen has over 25 years of experience in the financial markets and currently based in Singapore as the Head of Trading Asia Pacific with OANDA. Stephen's market views focus on the movement of G-10 and ASEAN Currencies. His views appear in Bloomberg, CNBC.Reuters, New York Times WSJ and the Economist. His media appearances include Bloomberg TV & Radio, BBC International, Sky TV, Channel News Asia, ASTRO AWANI and BFM Malaysia. Stephen has an extensive trading experience in Spot and Forward FX, Currency and Interest Rate Futures, Money Market Derivatives and Precious Metals. Before joining OANDA, he worked with organisations like Nat West, Chemical Bank, Garvin Guy Butler, and Sumitomo Mitsui Banking Corporation. Stephen was born in Glasgow, Scotland, and holds a Degree in Economics from the University of Western Ontario.
Stephen Innes