Australia’s Consumer Price Index (CPI) rose 0.2% QoQ in the third quarter (Q3) of 2024, compared to the 1.0% increase in the previous quarter, according to data from the Australian Bureau of Statistics (ABS). Annually, CPI inflation fell to 2.8% in Q3, below the market consensus of 2.9%. The RBA Trimmed Mean CPI for Q3 rose 0.8% and 3.5% on a quarterly and annual basis, respectively. The AUD/USD pair reacted by edging lower following the inflation data release.
In the last 7 days, the Australian Dollar (AUD) showed weakness against the Euro and other major currencies. The percentage changes against listed currencies for the AUD were negative. The heat map provided a visual representation of the currency changes, with the AUD showing a decline in value against most of the listed currencies.
The expectations for Australia’s inflation rate numbers were for the Monthly CPI to rise by 2.3% in September and the quarterly CPI to increase by 0.3% QoQ and 2.9% YoY in Q3. With inflationary pressures receding, the odds for an interest rate trim were expected to increase, given the shrinking growth in the Australian economy. However, policymakers remained cautious about high inflation levels and the sustainability of these levels in the target range of 2% to 3%.
Market participants were looking ahead to the RBA’s upcoming monetary policy meeting on November 5, where the central bank’s stance on inflation levels would be revealed. Higher CPI figures were expected to be AUD bullish, while lower inflation may not lead to a shift in the RBA’s hawkish stance. The technical outlook for the AUD/USD pair suggested a downside bias, with immediate support at 0.6550 and resistance at 0.6630.
The release of the RBA Trimmed Mean CPI (YoY) by the Australian Bureau of Statistics was awaited by investors to gauge the changes in price levels and underlying inflation. A high reading would be bullish for the AUD, while a low reading would be bearish. Inflation measures were explained in detail, highlighting the importance of core inflation figures targeted by central banks to maintain economic stability.
Overall, the Australian inflation data indicated a slight rise in CPI in Q3, with expectations of easing inflationary pressures in the future. The RBA’s upcoming decision on interest rates and the impact of inflation levels on the AUD/USD pair would be closely monitored by market participants. The economic indicators and inflation FAQs provided valuable insights into the significance of inflation on currency movements and central bank policies.
