Economists forecast consumer prices will rise 0.2% month-over-month in September after stalling in August. A larger-than-expected increase could signal a sharper uptick in consumption, boosting demand for the Aussie dollar. On the other hand, an unexpected drop in prices may indicate weakening demand ahead of the Golden Week holiday. Falling prices would likely weigh on the Aussie dollar.
Traders should also consider producer price trends, given ongoing margin pressures. Economists expect producer prices to fall 2.3% year-over-year in September after declining 2.9% in August. Producers typically adjust prices based on demand conditions, passing cost increases or savings to consumers.
AUD demand would hinge on China’s economic strength, given that China accounts for roughly one-third of Australian exports. Improving demand could bolster Australian trade terms, the economy, and the Aussie dollar. Conversely, weakening demand could weigh on the Aussie dollar.
Beyond the data, US-China trade headlines will also influence AUD/USD trends. Rising tensions would weaken the Australian dollar, while hopes of a trade deal could lift sentiment.
AUD/USD: Key Scenarios to Watch
Bearish AUD/USD Scenario: Weak Chinese data, dovish RBA comments, and rising trade tensions may push AUD/USD toward $0.645.
Bullish AUD/USD Scenario: Strong Chinese inflation data, hawkish RBA rhetoric, and easing trade tensions may send AUD/USD above the 200-day EMA. A break above the 200-day EMA could pave the way for a move to $0.655.
