CPI for 1Q estimated to come in at +0.2%. YoY 1.7% (Unchanged)
In the new trading day, the CPI data out of Australia will be released. The expectations are for CPI to come out at +0.2% vs. a gains of +0.4% for the 4Q. The YoY is expected to remain unchanged at 1.7%.
The inflation data out of Australia is a quarterly release (obviously). Just to give you an idea, in January, the number came out stronger than expected at 0.4% vs 0.3%. The AUDUSD rallied about 40 pips in the hour of the release. In October 2015, the release came out weaker than expectations (+0.5% vs +0.7% est and 1.5% vs 1.7% est) and the price fell about 75 pips in the first hour. In July 2015, the first hour saw a 50 pip fall in the 1st hour and it extended to 88 pips in the first 3 hours of trading after the release (weaker at +0.7% vs +0.8% and 1.5% YoY vs 1.7% est).
That gives you an idea of the potential volatility.
Technically, the price has centered itself near the 100 and 200 hour MA which come in at the 0.7743 level (they have converged). Looking at the hourly chart above, the pair is also near an area that has provide a ceiling and floor over the last 8 or so days (at 0.7722-36). A move below that area - and then below the 0.7700 trend line - will put the bears fully in control (off a weaker number). PS. the breaking of the 0.7700 level will also be a neckline break on a head and shoulders chart formation.
That should be enough to push the price to the 0.7670 level. The 50% midpoint of the move up from the April low comes in a 0.76626 (not shown). So the pair should stall at least on the first look. If broken, however, a move below that area will have the pair looking toward 0.7619.
Should the price make it to 0.7619, it would represent about 118 pips from the current level. That is not out of the question on a weaker number especially since the pair is trading near high level going back to June 2015.
On the bullish side, if the number is higher than expectations, the pair will be moving away from the yellow swing area, and I would expect that a test of the month highs at 0.7834. That high was the highest level going back to June 2015, when the price peaked at 0.7847. The 0.7834-47 should slow any rise with stops on a break above.
If the number comes out as expected, bias clues will come of the MAs and the yellow swing level. Stay below and the bias is more bearish. Move above the bias is more bullish. Listen to the price action against the technical levels outlined, for your trading clues on a number close to expectations.