Australia’s CPI studying fell in need of estimates in November, as annual inflation slowed from 3.8% to three.4% and briefly revived dovish RBA expectations.
Which AUD methods moved past the watchlist stage, and the way did shifting total market sentiment affect the outcomes?
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We’re breaking down our Australian greenback setups this week and inspecting how every pair carried out after the Australian CPI miss whereas markets stayed cautious amid different main market drivers.
The Setup
What We Have been Watching: Australian CPI (November 2025)
Expectation: Headline CPI to carry regular at 3.8% year-on-year
Information final result: Annual inflation slowed from 3.8% to three.4%, month-to-month print got here in flat vs. anticipated 0.1% uptick
Market atmosphere surrounding the occasion: Slight danger rebound however nonetheless some extent of warning surrounding Venezuela disaster, resurfacing China-Japan tensions, and U.S. knowledge focus
Occasion Final result
Headline CPI slowed from 3.8% year-on-year in October to only 3.4% in November, as each items and providers inflation moderated. Trimmed imply inflation additionally eased, though housing prices continued to exert robust upward stress.
Key Takeaways:
Headline CPI rose 3.4% year-over-year in November, down from 3.8% in October and marking the bottom studying since mid-2024
Trimmed imply inflation (core measure) eased to three.2% yearly from 3.3%, the bottom since December 2021
Month-to-month CPI was flat (0.0%) in authentic phrases however rose 0.2% on a seasonally adjusted foundation
Housing prices remained the biggest contributor to inflation at 5.2% yearly, pushed primarily by electrical energy and rents
Electrical energy costs surged 19.7% yearly as Queensland state rebates have been exhausted, although the tempo moderated from October’s 37.1% enhance
Companies inflation eased to three.6% from 3.9%, whereas items inflation slowed to three.3% from 3.8%
AUD initially had a bearish response to the weaker-than-expected headline figures, as merchants in all probability thought-about a possible change again to a extra dovish RBA stance.
Nonetheless, the forex rapidly stabilized inside minutes after the discharge and ultimately reversed larger probably on account of persistently elevated providers inflation above the central financial institution’s consolation zone.
Basic Bias Triggered: Bullish AUD setups
Broad Market and Exogenous Drivers:
Venezuela Pressure Escalation (Monday): Merchants greeted the primary buying and selling week of the yr with a contemporary spherical of geopolitical tensions, stemming from information of the U.S. seize of Venezuela’s President Maduro, which then prompted worldwide outcry. Protected-haven flows additional picked up on weak eurozone mid-tier knowledge, earlier than frowns turned the wrong way up earlier than the day ended as merchants judged that the fallout from Venezuela could be restricted.
International Financial Information Focus (Tuesday-Wednesday): Market gamers then turned their consideration to main U.S. jobs indicators forward of the NFP launch later within the week, with knowledge factors (ISM providers PMI, preliminary jobless claims) coming in internet optimistic. Some inexperienced shoots in German manufacturing facility orders knowledge additionally helped markets stayed cheery midweek, together with sticky inflation knowledge from Australia that finally supported hawkish RBA expectations.
Greenback Domination (Thursday-Friday): Value motion leaned strongly in favor of the U.S. greenback in the course of the again half of the week, because the European slowdown narrative gained additional traction on not-so-impressive knowledge from the U.Okay. and Switzerland whereas merchants positioned for a possible upside NFP shock. Resurfacing China-Japan tensions additionally didn’t do higher-yielding and Asian currencies a lot favors both.
Despite the fact that the NFP numbers turned out combined, markets interpreted the outcomes to be broadly supportive a extra hawkish Fed, as underlying parts and different mid-tier stories supported the U.S. financial restoration story. Weak point in Japan’s common money earnings report additionally rendered the greenback as the popular safe-haven forex by week’s finish, whereas speculations of elevated Chinese language stimulus to fight deflation introduced temporary inflows to commodity currencies.
AUD/JPY: Bullish Occasion Final result + Danger-On State of affairs = Arguably good odds of a internet optimistic final result
AUD/JPY 1-hour Foreign exchange Chart by TradingView
Our watchlist setup eyed a possible lengthy AUD/JPY alternative ought to the Australian CPI launch are available above expectations. Though the headline outcomes fell in need of estimates, there was a strong case for additional AUD upside as core inflation remained sticky at 3.2%, which remains to be above the central financial institution’s 2-3% consolation zone.
After the temporary dip following the discharge, Aussie merchants additionally took notice of how the readings have been dragged decrease by one-off electrical energy value fluctuations after rebates as a substitute of broad-based cooling value pressures. With that, AUD rapidly acquired again on its toes and ripped larger whereas markets continued to count on a 39% likelihood of a February RBA price hike regardless of the CPI miss.
These allowed AUD/JPY to maneuver past the watchlist stage, because of the mixture of a rebound in risk-taking following the preliminary Monday dip from Venezuela geopolitical tensions. AUD/JPY managed to increase its post-CPI run to R2 (105.79) earlier than a bearish candlestick shaped to recommend potential profit-taking on the resistance stage.
The highlight shifting to U.S. knowledge factors and potential upside NFP shock triggered some risk-off flows that weighed on AUD midweek, although, earlier than a contemporary wave of yen weak spot got here in play on account of weak Japanese providers PMI and common money earnings allowed the pivot level (104.86) to carry as assist. This lifted AUD/JPY again above the 105.00 deal with then as excessive as round 105.60 earlier than the week closed, together with the opportunity of elevated Chinese language stimulus following a combined CPI print.
Not Eligible to maneuver past Watchlist – AUD/NZD & Bearish AUD Setups
AUD/NZD: Bullish Occasion Final result + Danger-Off State of affairs
AUD/NZD 1-hour Foreign exchange Chart by TradingView
Our analysts eyed a potential pattern line bounce on AUD/NZD, because the pair appeared able to reestablish assist across the 1.1600 zone in a risk-off setting that tends to favor the Aussie over the Kiwi. The pair gained traction in its ongoing uptrend even earlier than the CPI launch, pushing the worth to almost check the 1.1700 deal with as some risk-off flows probably weighed extra closely on the Kiwi early within the week.
Though the surface-level CPI outcomes fell beneath estimates, underlying knowledge revealed sticky core inflation that was sufficient to maintain hawkish RBA expectations anchored. Consequently, AUD/NZD fought to carry regular round R1 within the periods that adopted, at the same time as strengthening hawkish Fed expectations continued to dampen risk-taking midweek.
Nonetheless, the tug-o-war of danger flows between the Aussie and Kiwi for probably the most a part of the week prevented this pair from transferring past the watchlist stage, as neither forex was capable of flex its muscular tissues lengthy sufficient to emerge as the popular danger forex amid shifting sentiment.
AUD/NZD ultimately broke above consolidation and R1 in direction of the tip of the week, partly pushed by downbeat Chinese language inflation knowledge spurring expectations of further stimulus that would show helpful for the Australian financial system, however positive aspects have been muted.
GBP/AUD: Bearish Occasion Final result + Danger-On State of affairs
GBP/AUD 1-hour Foreign exchange Chart by TradingView
Our analysts anticipated a cooler-than-anticipated Australian CPI print to gasoline dovish Reserve Financial institution of Australia hypothesis. When mixed with the British pound, which just lately discovered assist from the Financial institution of England’s latest “hawkish minimize” occasion, GBP/AUD bounced above what gave the impression to be a Triple Backside sample on the 1-hour timeframe.
Whereas Australia’s headline CPI did are available cooler for November, markets zeroed in on underlying value pressures that stayed hawkish. That was sufficient to ship AUD sharply larger and invalidate our GBP/AUD bullish setup earlier than it may transfer past the watchlist stage.
GBP/AUD bottomed close to 1.9980 earlier than considerations over China-Japan tensions and a pullback in gold costs took some shine off the Aussie in opposition to the pound. The pair then floor larger within the second half of the week, closing close to 2.1000 however nonetheless beneath the Triple Backside neckline we had flagged.
AUD/USD: Bearish Occasion Final result + Danger-Off State of affairs
AUD/USD 1-hour Foreign exchange Chart by TradingView
AUD/USD had been tossing and turning inside a variety between S1 at .6660 and R1 at .6730 by way of the latter half of December, repeatedly testing resistance simply forward of the Australian CPI launch.
Our watchlist setup was in search of a possible reversal off the ceiling again towards assist if the inflation numbers got here in mushy. As a substitute, the U.S. greenback’s early week weak spot & internet optimistic Chinese language PMIs, pushed AUD/USD above its recognized vary and knocked the setup out earlier than it may transfer past the watchlist stage.
AUD/USD went on to tag the .6761 R2 Pivot Level resistance earlier than a U.S. greenback restoration after better-than-expected U.S. providers PMIs dragged the pair again decrease, not solely again contained in the vary but additionally to check the vary assist because the Greenback dominated the remainder of the week.
The Verdict
The Australian CPI launch got here in beneath expectations, but it surely didn’t appear sufficient to materially revive dovish RBA expectations since market watchers targeted on elevated providers inflation that supported the hawkish central financial institution narrative.
Consequently, the forex’s preliminary dip proved to be short-lived since it will definitely regained floor on bolstered speculations that the RBA may chorus from reducing rates of interest early this yr. This response, mixed with
Whereas the preliminary market response to the CPI report triggered an AUD dip, the forex rapidly discovered its footing as merchants digested the one-off value results and the way the numbers finally saved RBA tightening expectations anchored. Sentiment additionally leaned in favor of a danger rebound, as merchants judged that the Venezuelan fallout could be restricted whereas the highlight quickly shifted to internet optimistic U.S. jobs knowledge.
AUD/JPY was our major candidate to maneuver past the watchlist stage, given the general bullish response to the Australian inflation report and hawkish RBA speculations, in addition to some risk-on undertones surrounding the goal occasion, particularly because the scenario between Venezuela and the U.S. didn’t escalate additional militarily.
Though some risk-off vibes picked up in direction of the latter a part of the week on account of bolstered Fed tightening expectations, the pair was additionally capable of profit from yen promoting on greenback inflows and weak Japanese mid-tier knowledge that forged doubts on the hawkish BOJ stance.
General, we price the watchlist dialogue as “neutral-to-likely supportive” of a possible optimistic final result. The weaker than anticipated final result didn’t spark a simple prolonged bearish AUD response and as a substitute triggered a run larger, placing AUD/JPY in a superb place to benefit from additional positive aspects, though danger administration and cease placement would have performed a vital position in potential outcomes because the pair dipped beneath pre-CPI ranges earlier than recovering later within the week.
As an example, short-term merchants who have been capable of catch the temporary AUD dip instantly after the CPI report was printed may have caught the intraday rally from R1 to R2 earlier than reserving earnings on the formation of a reversal candlestick.
In the meantime, longer-term merchants who noticed the prolonged rally pre-event and ready to for a pullback alternative to the resistance-turned-support zone or rising pattern line may have caught the latter rally again to R1 and probably wound up with higher return-on-risk.
Key Takeaways:
Value Reactions Aren’t All the time Simple
Stronger than anticipated knowledge don’t all the time consequence to bullish forex actions and, on this explicit case, downbeat figures don’t assure bearish outcomes both. Given the persistently hawkish RBA narrative, merchants have been extra discerning of underlying knowledge and one-off elements that continued to assist the tightening bias that fueled sustained AUD upside regardless of the headline miss.
Cease Placement and Entry Timing Are Essential
Our viable AUD/JPY watchlist setup highlights how danger administration choices would have performed a decisive position in figuring out whether or not or not a protracted place would have turned out worthwhile.
On this case, sticking to a short-term technique of shopping for the dip and reserving earnings on indicators of a possible reversal primarily based on technicals and market sentiment would have bagged fast pips, however protecting the commerce open for for much longer would have probably erased positive aspects. Sticking to swing alternatives primarily based on pullbacks and central financial institution divergences would have additionally performed out properly, however this probably required extra persistence and both decrease or wider stops that affect return-on-risk.
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