Upcoming key reports
Looking ahead, AUD/USD will be driven by Wednesday’s May consumer price index (CPI) report and Thursday’s labour force report, both previewed below. From the US perspective, further updates from the Middle East talks and Thursday night’s core personal consumption expenditures (PCE) inflation data will be key influences.
CPI May
Date: Wednesday, 24 June, at 11.30am AEST
April’s CPI data saw some cooling, with headline inflation falling to 4.2% year-on-year (YoY), down from 4.6% in March. The RBA’s preferred measure of inflation, the trimmed mean, edged higher to 3.4% from 3.3%.
The market is looking for the headline CPI rate to bounce back to 4.3% YoY, while the RBA’s preferred trimmed mean measure is likely to tick higher to 3.5% from 3.4%.
Labour force May
Date: Thursday, 25 June, at 11.30am AEST
Last month, the April employment report delivered a softer-than-expected outcome, with the number of employed people falling by 18,600, well below the roughly +15,000 consensus forecast. At the same time, the unemployment rate rose 0.2 percentage points to 4.5%, the highest level since late 2021, as the participation rate eased slightly to 66.7% from 66.8%.
Looking ahead to the May update, consensus expects a rise in employment of 32,500, with the unemployment rate expected to tick lower to 4.4% from 4.5% prior.
In summary
The read-through here is that a hotter inflation print combined with a solid rebound in jobs would undoubtedly keep the door wide open for further RBA rate hikes before year-end. Conversely, cooler readings across both releases would add serious weight to the view that the RBA’s current policy setting is restrictive enough.
The interest rate market starts this week pricing in 6 bp of rate hikes for the RBA’s August meeting, with a cumulative 15 bp of RBA rate hikes priced for the remainder of 2026.
