The Consumer Price Index data from Australia has disappointed market participants when the key figures were released at the level of 0.6% while market participants expected an increase to 0.7%. The biggest increase in inflation was noted in alcohol and tobacco subindex (from 3.5% to 7.2%), housing (from 0.3% to 3.4%) and health (from -0.6% to 4.0%).
The headline inflation gauge for Australia reflects a decline in the purchasing power of the Aussie Dollar, where each Dollar buys fewer goods and services. In terms of measuring inflation, CPI is the most obvious way to quantify changes in purchasing power. The report tracks changes in the price of a basket of goods and services that are typically bought by metropolitan Australian households. An increase in the index indicates that it takes more Australian Dollars to purchase this same set of basic consumer items.
Let's now take a look at the AUD/USD technical picture at the H4 time frame. Another bunch of disappointing data from Australia (yesterday - CPI, today - building permits) scared holders of long positions and the AUD/USD is testing the support at the level of 0.8000. AUD is also going down the cross rates with NZD and CAD, because AUD / NZD and AUD / CAD have been popular recently to buy. Now for the top one in all three comes a CAD -the better than expected GDP from Canada yesterday and the optimistic completion of the 6th round of negotiations NAFTA gives reasons to buy.
