Let's look at the news event's we've got lining up this week...
The quarterly AUD Consumer Price Index (CPI) report is releasing on Wednesday, which measures the change in the average price basket of goods and services by consumers, which can be anything from food, transportation and medical care. Changes in the CPI are used to assess price changes associated with living in the country. It is one of the most used statistics to identify periods of inflation or deflation.
Analysts expect a pickup in price pressures to advance from 0.5% to 0.6% and the trimmed mean CPI to jump from 0.3% to 0.5%. However, with what's going on currently and the ongoing set of lockdowns caused by the Delta variant, this may not life Aussie traders' spirits.
No interest rate changes are expected from the Central bank, and the Fed Chair Powell will likely downplay the pickup in inflation.
Pressure is still continuing to grow on policymakers to start tapering assets since the economy has been recovering. Any indication that the Fed is closer to scaling back their stimulus could be bullish for the USD.
Strong growth figures are expected for the previous quarter, and the economy is likely to grow by 8.5% in Q2. Since most companies and businesses have reopened again over the past couple months, this has spurred consumer activity and investments.
A better than expected headline could reinforce Fed tightening hopes while a worse than expected headline could encourage doubts on seeing tapering moves in the near future.
The Core Personal Consumption Expenditures (PCE) Price Index is releasing on Friday and it reflects changes in the prices of goods and services purchased by consumers in the US.
Another pickup in inflation is expected, and we're looking to see the reading pick up from 0.5% to 0.6% in June. This is the Fed's preferred measure of inflation, and hence should be a very big deal!
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