Australia CPI Actual 0.1%, Expected 0.5%, Previous -0.3%

Release Explanation: This release is the headline inflation gauge for Australia. 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 is typically bought by a metropolitan Australian household. “An increase in the index indicates that it takes more Australian Dollars to purchase this same set of basic consumer items”, Trade Team said.

Unlike most other countries, Australia publishes CPI quarterly instead of monthly, increasing the market impact of the report upon release. The headline number is released as the percentage change from the previous quarter or year.

Trade Desk Thoughts: The Australian consumer price index came in at 0.1 percent for the March quarter 2009, which is below what economists had forecasted, but higher than the 0.3% drop in the December quarter 2008. The CPI rose 2.5% through the year to March quarter 2009, compared to an annual rise of 3.7% to December quarter 2008. The most significant price increases were pharmaceuticals (+13.0%), rents (+1.7%), secondary education fees (+7.6%), vegetables (+6.0%), and electricity (+3.6%).

The most significant offsetting price falls this quarter were for deposit and loan facilities (-14.1%), automotive fuel (-8.1%), domestic holiday travel and accommodation (-5.1%) and overseas holiday travel and accommodation (-4.0%).

Forex Technical Reaction:
The Aussie initially rose 15 pips after the release but has since given back those gains and is currently trading 60 pips below the Asian opening price. The pair has moved back below the 20 day simple moving average.