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Mar 25 - 09:55 AM

ANZ: What to Expect from AUD this Week Amid Upcoming CPI Data?

By eFXdata  —  Mar 25 - 09:01 AM

Synopsis:

ANZ projects a bearish stance on AUD/USD ahead of this week's CPI release, suggesting that the Australian Dollar may not fare as well against its G10 counterparts. Historical tendencies show the AUD/USD often underperforms following CPI data releases, regardless of the data's direction. This pattern, consistent throughout 2023 and into 2024, strengthens ANZ's expectation of a short bias on AUD/USD around the CPI announcement. Moreover, a potential decline in retail sales could further pressure the AUD, particularly against the NZD, with 1.09 seen as the upper boundary of recent fluctuations.

Key Points:

  • Bearish Bias on AUD/USD: Anticipation of downside risk for AUD/USD surrounding the CPI release, supported by past trends of underperformance regardless of CPI data direction.
  • Influence of Global Events: Notably, global events have overshadowed local data in influencing AUD/USD rates, as observed in the limited impact of November's CPI data.
  • AUD/NZD Outlook: Expectations of softness in AUD/NZD, especially mid-week, with an eye on the 1.09 level as the recent range's upper limit.
  • Impact of Retail Sales Data: A forthcoming retail sales report could serve as an additional catalyst for AUD depreciation.

Conclusion:

As CPI data looms, ANZ maintains a cautious outlook on the Australian Dollar, predicting it may underperform within the G10 sphere and particularly against the US Dollar and New Zealand Dollar. Historical patterns of AUD's response to CPI data, alongside potential influences from upcoming retail sales figures, guide ANZ's bearish bias. Investors and traders are advised to watch for AUD movements around these key economic releases, with AUD/USD expected to fluctuate between 0.655 and 0.67 in the upcoming week.

Source:
ANZ Research/Market Commentary

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