The Australian Bureau of Statistics (ABS) will publish the Consumer Price Index (CPI) data for November at 00:30 GMT on Wednesday.
This is the second complete monthly CPI report, as the government continues to transition from the quarterly CPI to the monthly gauge as the primary measure of headline inflation.
“However, the RBA has said it still prefers the quarterly prints for a better gauge of inflation trends, given the new data can be volatile,” according to Reuters.
The inflation report is eagerly awaited to gauge the next interest rate move by the Reserve Bank of Australia (RBA), which could significantly impact the performance of the Australian Dollar (AUD).
What to expect from Australia’s inflation rate numbers?
Economists forecast Australia’s CPI to increase by 3.7% annually in November, after rising by 3.8% in October – the highest since June 2024 and above median forecasts of 3.6%. The RBA’s inflation target is in the range of 2%-3%.
In October, the CPI showed no growth on a monthly basis, while the Trimmed Mean CPI rose at an annual rate of 3.3% in the same period.
Improved business conditions, robust economic growth and hotter-than-expected inflation prompted the central bank to keep the Official Cash Rate (OCR) steady at 3.6% following its December monetary policy meeting.
Speaking at the post-policy meeting press conference in December, RBA Governor Michele Bullock noted that “inflation and jobs data will be important for board meeting in February,” adding that she “would not put timing on any future move, (it) will be meeting by meeting.”
Since then, the Australian labor market has shown signs of slowing, with the number of employed people dropping by 21,300 in November and Full-time Employment falling by 56,500 even as the Unemployment Rate remained at 4.3% in the reported month.
Against this backdrop, the Australian CPI data holds the key to determining whether the RBA could opt for a rate hike next month. “RBA cash rate futures imply nearly 50 basis points (bps) of rate increase in 2026,” according to analysts at BBH.
How could the Consumer Price Index report affect AUD/USD?
Heading into the Australian CPI inflation showdown, the AUD is sitting at its highest level in 15 months against the US Dollar (USD) near 0.6750. Expectations of monetary policy divergence between the RBA and the US Federal Reserve (Fed) remain an important catalyst underpinning the AUD/USD pair.
A surprise pick-up in Australia’s inflation could lift the odds for an interest rate hike by the RBA as early as next month, pushing AUD/USD further toward the 0.6800 level. On the other hand, a bigger-than-expected drop in the inflation figure could alleviate the pressure on the RBA for an imminent shift to tightening, which will likely fuel a correction in the Aussie.
Dhwani Mehta, Asian Session Lead Analyst at FXStreet, highlights key technical levels for trading AUD/USD following the CPI release.
“AUD/USD is holding its recent bullish momentum, with the 14-day Relative Strength Index (RSI) approaching the overbought territory, suggesting that there could be more room for upside before a pullback kicks in.”
“The Aussie pair could see a fresh leg north toward 0.6800 on acceptance above the 0.6750 psychological mark. The next relevant resistance levels are aligned at the October 3, 2024, high of 0.6888 and the September 2024 high of 0.6942. Conversely, any retracements could test the initial support at the 21-day Simple Moving Average (SMA) at 0.6671, below which a deeper correction will open toward the 0.6600 mark,” Dhwani adds.
Australian Dollar Price This week
The table below shows the percentage change of Australian Dollar (AUD) against listed major currencies this week. Australian Dollar was the strongest against the Euro.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | 0.09% | -0.50% | -0.33% | 0.15% | -0.64% | -0.55% | 0.02% | |
| EUR | -0.09% | -0.60% | -0.35% | 0.06% | -0.73% | -0.65% | -0.07% | |
| GBP | 0.50% | 0.60% | 0.13% | 0.67% | -0.13% | -0.05% | 0.53% | |
| JPY | 0.33% | 0.35% | -0.13% | 0.46% | -0.34% | -0.25% | 0.38% | |
| CAD | -0.15% | -0.06% | -0.67% | -0.46% | -0.64% | -0.71% | -0.13% | |
| AUD | 0.64% | 0.73% | 0.13% | 0.34% | 0.64% | 0.09% | 0.66% | |
| NZD | 0.55% | 0.65% | 0.05% | 0.25% | 0.71% | -0.09% | 0.58% | |
| CHF | -0.02% | 0.07% | -0.53% | -0.38% | 0.13% | -0.66% | -0.58% |
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the Australian Dollar from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent AUD (base)/USD (quote).
Australian Dollar FAQs
One of the most significant factors for the Australian Dollar (AUD) is the level of interest rates set by the Reserve Bank of Australia (RBA). Because Australia is a resource-rich country another key driver is the price of its biggest export, Iron Ore. The health of the Chinese economy, its largest trading partner, is a factor, as well as inflation in Australia, its growth rate and Trade Balance. Market sentiment – whether investors are taking on more risky assets (risk-on) or seeking safe-havens (risk-off) – is also a factor, with risk-on positive for AUD.
The Reserve Bank of Australia (RBA) influences the Australian Dollar (AUD) by setting the level of interest rates that Australian banks can lend to each other. This influences the level of interest rates in the economy as a whole. The main goal of the RBA is to maintain a stable inflation rate of 2-3% by adjusting interest rates up or down. Relatively high interest rates compared to other major central banks support the AUD, and the opposite for relatively low. The RBA can also use quantitative easing and tightening to influence credit conditions, with the former AUD-negative and the latter AUD-positive.
China is Australia’s largest trading partner so the health of the Chinese economy is a major influence on the value of the Australian Dollar (AUD). When the Chinese economy is doing well it purchases more raw materials, goods and services from Australia, lifting demand for the AUD, and pushing up its value. The opposite is the case when the Chinese economy is not growing as fast as expected. Positive or negative surprises in Chinese growth data, therefore, often have a direct impact on the Australian Dollar and its pairs.
Iron Ore is Australia’s largest export, accounting for $118 billion a year according to data from 2021, with China as its primary destination. The price of Iron Ore, therefore, can be a driver of the Australian Dollar. Generally, if the price of Iron Ore rises, AUD also goes up, as aggregate demand for the currency increases. The opposite is the case if the price of Iron Ore falls. Higher Iron Ore prices also tend to result in a greater likelihood of a positive Trade Balance for Australia, which is also positive of the AUD.
The Trade Balance, which is the difference between what a country earns from its exports versus what it pays for its imports, is another factor that can influence the value of the Australian Dollar. If Australia produces highly sought after exports, then its currency will gain in value purely from the surplus demand created from foreign buyers seeking to purchase its exports versus what it spends to purchase imports. Therefore, a positive net Trade Balance strengthens the AUD, with the opposite effect if the Trade Balance is negative.