{"id":701789,"date":"2024-07-30T15:20:57","date_gmt":"2024-07-30T05:20:57","guid":{"rendered":"https:\/\/www.gomarkets.com\/?p=701789"},"modified":"2024-07-30T15:36:04","modified_gmt":"2024-07-30T05:36:04","slug":"one-of-two-ways-trading-australias-cpi-data","status":"publish","type":"post","link":"https:\/\/www.gomarkets.com\/en\/articles\/central-banks\/one-of-two-ways-trading-australias-cpi-data\/","title":{"rendered":"One of two ways: Trading Australia&#8217;s CPI data"},"content":{"rendered":"<p><span style=\"font-weight: 400;\">Australia&#8217;s second quarter CPI due out on the 31st of July could go one of two ways so let&#8217;s dive into how it will move and how to trade it.<\/span><\/p>\n<p><b>First way &#8211; Coming in line or below<\/b><\/p>\n<p><span style=\"font-weight: 400;\">Currently 24 of the 30 surveyed economists see inflation coming in line or below expectations. That is June quarter CPI coming in at 1% quarter on quarter and 3.8% year on year. Trimmed mean expected to come in at 0.9 of 1% quarter on quarter and 4% year on year remembering this is the preferred measure of the RBA. If this is indeed the case it would mean a step down from the March quarter read which was 1% and would hold year on year inflation at 4%.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">We need to highlight the RBA own forecast as well, because at the last Statement of Monetary Policy update the forecasted head inflation was the same as the consensus 3.8% year on year. But trimmed mean inflation is 0.2% lower at 3.8% year on year. This will be interesting because the Hawks out there believe anything that is 3.9 or above will be a trigger for the RBA next Tuesday.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">The variance can be put down to several things how the trimming is actually done but what really matters to us as traders is the impact of dwelling and rents on the inflation figure which has been a key factor for inflation overshooting over the last two years.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">If we have a look at rent, expectation is for a 1.9% June quarter rise down from 2.1% in the March quarter. So trending in the right direction but still well above a comfortable and sustainable level. Rent\u2019s overall contribution to the full figure at this point is 0.12 compared to house purchases which is only 0.08 the expectation for the June quarter is 1% the house purchases have 1.9% for utilities. This gives a combined figure of 1.35% for the June quarter in housing. It is the number one thing to watch on Wednesday.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Health is the other part of the inflation data to watch. We&#8217;ve not got any major updates in the monthly CPI data about health and the expectation is for the June quarter to see a 2.5% increase in health inflation. This is the other part of the data that will matter.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">We highlight all this to give you as much information as possible to make informed decisions at the 11:30 Australian Eastern Standard Time drop. Because if the data does come in at these levels it will probably be enough to confirm the RBA will hold at their August 6 meeting. And in line or below figure is likely met with dovish views and bearish trading. More on that below.<\/span><\/p>\n<p><b>Second way: Above expectations<\/b><\/p>\n<p><span style=\"font-weight: 400;\">What&#8217;s so interesting about Wednesday&#8217;s CPI is that for the last 6 consecutive quarterly updates Australia CPI has not just come in above consensus it has been above the full range of views. It&#8217;s why its giving us reason to pause and to suggest that there is every chance based on the data from the monthly inflation figures the upside surprise is a very real possibility. Retail spending although sluggish has remained above expectations, services have seen reasonable price increases during the April to June. As things like insurance, telecommunications and utilities increase prices well and truly above the inflation rate. Education already expected to be strong has also seen wage increases during this quarter along with higher infrastructure spending from state governments.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Housing which is already forecasted to be strong has surprised to the upside in every one of those six previous readings and according to Core Logic and Prop Track data of the April to June figures suggests that it could be a seventh time in a row housing comes in above expectations.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">The final unknown is the energy rebates. It&#8217;s been so surprising just how long injury baits have been able to hold down electricity prices in the CPI. Several forecasts now show the snapback from these rebates is on. If this transpires, the expectation is for energy to snap 7.2% higher in the June quarter. Now the caveat here is that already the federal government has put a new $300 per household energy rebate policy in place so maybe this will be ignored. But there&#8217;s no getting away from the fact energy is the big unknown and one that could blow the CPI data well above expectations.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">This is likely to see bullish bets being made on the August 6 RBA meeting and strong positioning in the Aussie dollar. We think at the moment this outcome is being discounted by the market and by the economic world. Because the question that needs to be asked can the RBA justify inflation now running above its own target for three years in a row? We would argue it probably can&#8217;t.<\/span><\/p>\n<p><b>What trade<\/b><\/p>\n<p><span style=\"font-weight: 400;\">First and foremost, we need to warn against looking at AUDJPY and AUDUSD. The reason for this, do not forget pretty much at the same time as Australia\u2019s CPI is being released the Bank of Japan is forecasted, for the first time in decades, to release it artificially depressed interest rates.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">We know that the BoJ has been defending the JPY over the past month and having seen the AUDJPY get to as high as \u00a5109.5 in early July the cross now sits at parity. If the BoJ does do as forecasted the cross could do anything on Wednesday. Then there is the unknown about how traders will position with all the machinations the BoJ action and the CPI data means \u2013 realistically\u00a0 the cross could experience some mass volatility.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">The other is that it is the beginning of the US Federal Reserve\u2019s July meeting and although there is no expectation that they will cut rates on Thursday, it is unknown what would be said during chairperson Powell\u2019s press conference.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">FX safety trade has been pretty solid over the last period and money has flowed back to the USD. We are unsure about what could happen over the 48 hours between the CPI and when the Fed reports for that reason, we think the USD is probably not the one to look at for this particular piece of data trade.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Thus crosses such as EURAUD, AUDNZD and even AUDCAD are probably better options if you are going to trade pre and post the CPI data as there is no major impact on the other side of the cross from fundamentals in the next 72 hour period.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">If you are looking to the August 6 RBA meeting you can look at AUDUSD and AUDJPY but with entry points late on Thursday or Friday when there will be a greater understanding about what the Bank of Japan and the US Federal Reserve have done and will do in the future.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Happy trading<\/span><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Australia&#8217;s second quarter CPI due out on the 31st of July could go one of two ways so let&#8217;s dive into how it will move and how to trade it. First way &#8211; Coming in line or below Currently 24 of the 30 surveyed economists see inflation coming in line or below expectations. That is [&hellip;]<\/p>\n","protected":false},"author":94,"featured_media":701810,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[2805,4382],"tags":[],"class_list":["post-701789","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-central-banks","category-featured"],"acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v24.5 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>One of two ways: Trading Australia&#039;s CPI data - Wixad<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.gomarkets.com\/en\/articles\/central-banks\/one-of-two-ways-trading-australias-cpi-data\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"One of two ways: Trading Australia&#039;s CPI data - Wixad\" \/>\n<meta property=\"og:description\" content=\"Australia&#8217;s second quarter CPI due out on the 31st of July could go one of two ways so let&#8217;s dive into how it will move and how to trade it. First way &#8211; Coming in line or below Currently 24 of the 30 surveyed economists see inflation coming in line or below expectations. That is [&hellip;]\" \/>\n<meta property=\"og:url\" content=\"https:\/\/www.gomarkets.com\/en\/articles\/central-banks\/one-of-two-ways-trading-australias-cpi-data\/\" \/>\n<meta property=\"og:site_name\" content=\"Wixad\" \/>\n<meta property=\"article:published_time\" content=\"2024-07-30T05:20:57+00:00\" \/>\n<meta property=\"article:modified_time\" content=\"2024-07-30T05:36:04+00:00\" \/>\n<meta property=\"og:image\" content=\"https:\/\/www.gomarkets.com\/wp-content\/uploads\/2024\/07\/AdobeStock_825469739-1024x512.jpeg\" \/>\n\t<meta property=\"og:image:width\" content=\"1024\" \/>\n\t<meta property=\"og:image:height\" content=\"512\" \/>\n\t<meta property=\"og:image:type\" content=\"image\/jpeg\" \/>\n<meta name=\"author\" content=\"Evan Lucas\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:label1\" content=\"Written by\" \/>\n\t<meta name=\"twitter:data1\" content=\"Evan Lucas\" \/>\n\t<meta name=\"twitter:label2\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data2\" content=\"7 minutes\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\/\/schema.org\",\"@graph\":[{\"@type\":\"NewsArticle\",\"@id\":\"https:\/\/www.gomarkets.com\/en\/articles\/central-banks\/one-of-two-ways-trading-australias-cpi-data\/#article\",\"isPartOf\":{\"@id\":\"https:\/\/www.gomarkets.com\/en\/articles\/central-banks\/one-of-two-ways-trading-australias-cpi-data\/\"},\"author\":{\"name\":\"Evan Lucas\",\"@id\":\"https:\/\/www.gomarkets.com\/es\/#\/schema\/person\/277545d7009c19904fb74be390ee3d73\"},\"headline\":\"One of two ways: Trading Australia&#8217;s CPI data\",\"datePublished\":\"2024-07-30T05:20:57+00:00\",\"dateModified\":\"2024-07-30T05:36:04+00:00\",\"mainEntityOfPage\":{\"@id\":\"https:\/\/www.gomarkets.com\/en\/articles\/central-banks\/one-of-two-ways-trading-australias-cpi-data\/\"},\"wordCount\":1137,\"publisher\":{\"@id\":\"https:\/\/www.gomarkets.com\/es\/#organization\"},\"image\":{\"@id\":\"https:\/\/www.gomarkets.com\/en\/articles\/central-banks\/one-of-two-ways-trading-australias-cpi-data\/#primaryimage\"},\"thumbnailUrl\":\"https:\/\/www.gomarkets.com\/wp-content\/uploads\/2024\/07\/AdobeStock_825469739-scaled.jpeg\",\"articleSection\":[\"Central Banks\",\"Featured\"],\"inLanguage\":\"en-US\"},{\"@type\":\"WebPage\",\"@id\":\"https:\/\/www.gomarkets.com\/en\/articles\/central-banks\/one-of-two-ways-trading-australias-cpi-data\/\",\"url\":\"https:\/\/www.gomarkets.com\/en\/articles\/central-banks\/one-of-two-ways-trading-australias-cpi-data\/\",\"name\":\"One of two ways: Trading Australia's CPI data - 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That is [&hellip;]","og_url":"https:\/\/www.gomarkets.com\/en\/articles\/central-banks\/one-of-two-ways-trading-australias-cpi-data\/","og_site_name":"Wixad","article_published_time":"2024-07-30T05:20:57+00:00","article_modified_time":"2024-07-30T05:36:04+00:00","og_image":[{"width":1024,"height":512,"url":"https:\/\/www.gomarkets.com\/wp-content\/uploads\/2024\/07\/AdobeStock_825469739-1024x512.jpeg","type":"image\/jpeg"}],"author":"Evan Lucas","twitter_card":"summary_large_image","twitter_misc":{"Written by":"Evan Lucas","Est. reading time":"7 minutes"},"schema":{"@context":"https:\/\/schema.org","@graph":[{"@type":"NewsArticle","@id":"https:\/\/www.gomarkets.com\/en\/articles\/central-banks\/one-of-two-ways-trading-australias-cpi-data\/#article","isPartOf":{"@id":"https:\/\/www.gomarkets.com\/en\/articles\/central-banks\/one-of-two-ways-trading-australias-cpi-data\/"},"author":{"name":"Evan Lucas","@id":"https:\/\/www.gomarkets.com\/es\/#\/schema\/person\/277545d7009c19904fb74be390ee3d73"},"headline":"One of two ways: Trading Australia&#8217;s CPI data","datePublished":"2024-07-30T05:20:57+00:00","dateModified":"2024-07-30T05:36:04+00:00","mainEntityOfPage":{"@id":"https:\/\/www.gomarkets.com\/en\/articles\/central-banks\/one-of-two-ways-trading-australias-cpi-data\/"},"wordCount":1137,"publisher":{"@id":"https:\/\/www.gomarkets.com\/es\/#organization"},"image":{"@id":"https:\/\/www.gomarkets.com\/en\/articles\/central-banks\/one-of-two-ways-trading-australias-cpi-data\/#primaryimage"},"thumbnailUrl":"https:\/\/www.gomarkets.com\/wp-content\/uploads\/2024\/07\/AdobeStock_825469739-scaled.jpeg","articleSection":["Central Banks","Featured"],"inLanguage":"en-US"},{"@type":"WebPage","@id":"https:\/\/www.gomarkets.com\/en\/articles\/central-banks\/one-of-two-ways-trading-australias-cpi-data\/","url":"https:\/\/www.gomarkets.com\/en\/articles\/central-banks\/one-of-two-ways-trading-australias-cpi-data\/","name":"One of two ways: Trading Australia's CPI data - 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First way &#8211; Coming in line or below Currently 24 of the 30 surveyed economists see inflation coming in line or below expectations. That is ","link":"https:\/\/www.gomarkets.com\/en\/articles\/central-banks\/hold-tight-trading-the-rba\/","type":"next","category":"central-banks"},"previous":{"id":701667,"slug":"deja-vu-of-2023","title":"Deja vu of 2023","date":"2024-07-26 15:48:14","excerpt":"Australia&#8217;s second quarter CPI due out on the 31st of July could go one of two ways so let&#8217;s dive into how it will move and how to trade it. First way &#8211; Coming in line or below Currently 24 of the 30 surveyed economists see inflation coming in line or below expectations. That is ","link":"https:\/\/www.gomarkets.com\/en\/articles\/forex-trading\/deja-vu-of-2023\/","type":"previous","category":"featured"},"category":{"slug":"central-banks"},"_links":{"self":[{"href":"https:\/\/www.gomarkets.com\/en\/wp-json\/wp\/v2\/posts\/701789","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.gomarkets.com\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.gomarkets.com\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.gomarkets.com\/en\/wp-json\/wp\/v2\/users\/94"}],"replies":[{"embeddable":true,"href":"https:\/\/www.gomarkets.com\/en\/wp-json\/wp\/v2\/comments?post=701789"}],"version-history":[{"count":0,"href":"https:\/\/www.gomarkets.com\/en\/wp-json\/wp\/v2\/posts\/701789\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.gomarkets.com\/en\/wp-json\/wp\/v2\/media\/701810"}],"wp:attachment":[{"href":"https:\/\/www.gomarkets.com\/en\/wp-json\/wp\/v2\/media?parent=701789"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.gomarkets.com\/en\/wp-json\/wp\/v2\/categories?post=701789"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.gomarkets.com\/en\/wp-json\/wp\/v2\/tags?post=701789"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}