Australia has a couple of quarterly reports on tap this week. Will they be enough to re-energize the bulls into pulling the Aussie higher?
Quarterly CPI report (Apr 24, 2:30 am GMT)
Australia’s consumer prices only grew by 1.8% from a year ago in Q4 2018. That’s better than the expected 1.7% increase, slower than the 1.9% uptick that we saw in Q3, and the slowest since Q3 2017.
Meanwhile, the Reserve Bank of Australia (RBA)’s trimmed mean CPI came in at 1.8%, same as market expectations and Q3’s figures.
The 1.8% reading was juuust below the RBA’s 2.0% – 3.0% target band, so traders didn’t figure it warranted a rate cut just yet. The not-so-disappointing report pushed the Aussie higher during the release.
This week market players expect to see the annualized prices increase by another 1.7% from a year ago in Q1 2019. Ditto for the RBA’s trimmed mean CPI, which is expected to slow down from 1.8% to 1.7%. Last but not the least, the RBA’s weighted mean CPI is expected to dip from 1.7% to 1.6%.
If this week’s numbers miss the RBA’s target band AGAIN, then more traders could price in a potential rate cut some time this year. But if consumer prices reflect some momentum in Q1 2019, then we might see another Aussie intraday rally after the report is printed.
Quarterly PPI data (Apr 26, 2:30 am GMT)
Australia’s producer prices slowed down from 0.8% to 0.5% in Q4 2018. Not a good look for Australia’s inflation considering that the CPI data printed a few days earlier also underwhelmed the markets.
While traders were more focused on a Chinese PMI miss at the time, it probably didn’t help that Australia’s PPI numbers came in weaker-than-expected. The Aussie ended up falling sharply enough that it didn’t see recovery until the U.S. session.
This week traders expect to see a weaker quarterly growth (0.4% from 0.5%) even as they expect the annualized reading to stay at 2.0%.
Take note that Japan is scheduled to dump a bunch of mid-tier data around the time so, unless we see significant hits or miss, it’s likely that reaction to the report will be muted.