Australia is set to publish its latest inflation report, and this release could go a long way in shaping short-term expectations for the RBA’s next move.
Our Event Guide for Australia’s CPI Report already flagged the possibility of slightly cooler numbers in January. At the same time, it pointed out that rising commodity prices could keep pressure on consumer prices and reinforce already elevated expectations for further RBA tightening.
If the numbers come in stronger than expected and tilt hawkish for the Australian dollar, we could see traders focus on AUD/USD and EUR/AUD as markets quickly adjust rate expectations.
