Australian RBA's Quarterly CPI Preview: Aussie has limited bullish potential ahead of next RBA meeting

Australia will release Q3 inflation figures on Wednesday, October 28 at 00:30 GMT and the quarterly CPI is seen recovering after record lows in Q2. Investors are cautious as the Reserve Bank of Australia (RBA) paved the way for a fresh rate cut while the AUD/USD pair is technically neutral above the critical 0.7000 threshold, FXStreet’s Chief Analyst Valeria Bednarik reports.

Key quotes

“The quarterly CPI is expected at 1.5%, quite a recovery from the previous -1.9%. When compared to a year early, it is expected to recover from -0.3% to 0.7%. The Trimmed Mean CPI from the RBA is expected at 0.3% QoQ from -0.1%, and at 1.1% YoY from 1.2% in Q2. A significant improvement that falls short of RBA’s 2-3% target band.”

“Should the numbers miss the market’s expectations, a cash rate cut to 0.1% could be taken for granted for the upcoming meeting, on November 4, with AUD/USD probably falling towards the 0.7000 figure.”

“Despite the RBA paved the way for a rate cut, policymakers’ perspectives are generally positive. They keep reaffirming that the economic slowdown was not as bad as initially estimated. In this scenario, upbeat figures could provide support to the Australian dollar. Still, the aussie has a limited bullish potential, amid caution ahead of the next RBA meeting.”