Australia launched stronger-than-expected inflation information, because the headline annual CPI studying jumped to three.2% and surpassed its central financial institution’s 2-3% goal vary.
How did the Australian greenback react, and which amongst our watchlist setups yielded the perfect buying and selling alternative?
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We’re breaking down our AUD setups this week and the way every pair carried out after hotter-than-expected Australian CPI information whereas markets remained largely targeted on commerce headlines.
The Setup
What We Had been Watching: Australian Client Value Index (Q3 2025)
- Expectation: Headline CPI to rise from 0.7% to 1.0% q/q or from 2.1% to 2.9% y/y within the September quarter
- Information final result: Headline CPI surged to 1.3% q/q or 3.2% y/y, above the RBA’s 2-3% goal vary
- Market setting surrounding the occasion: Combined sentiment and threat correlations, as asset lessons have been pushed by commerce optimism forward of the Trump-Xi assembly, U.S. tech sector rally, central financial institution positioning, and resurfacing geopolitical tensions in Israel
Occasion Final result
Australia’s CPI rose 3.2% year-over-year within the third quarter of 2025, marking the very best inflation fee in over a yr and touchdown above the Reserve Financial institution of Australia’s goal band for the primary time since Q2 2024.
Key Takeaways:
- Headline CPI elevated 3.2% yearly in Q3 2025, considerably above the three.0% consensus forecast and accelerating from 2.1% in Q2
- Quarterly inflation rose 1.3%, pushed primarily by housing (+2.5%), recreation and tradition (+1.9%), and transport (+1.2%)
- Trimmed imply inflation climbed to three.0% yearly, up from 2.7% in Q2 – the primary enhance since December 2022
Probably the most vital value rises in Q3 have been concentrated in housing, recreation and tradition, and transport sectors. Property charges and costs additionally recorded their largest quarterly rise since 2014, rising 6.3% as native councils applied fee evaluations.
Basic Bias Triggered: Bullish AUD setups
Broad Market and Exogenous Drivers:
Commerce Optimism and Threat-On Rally (Monday-Tuesday): Markets surged as weekend developments revealed a U.S.-China diplomatic framework forward of Thursday’s Trump-Xi summit. The prospect of commerce de-escalation sparked a broad risk-on rally, sending equities to recent highs whereas gold dipped under $4,000. The continuing U.S. authorities shutdown continued depriving markets of important financial information.
Central Financial institution Volatility and Powell’s Hawkish Pivot (Wednesday): The Fed delivered an anticipated 25 foundation level minimize, however Chair Powell shocked markets by stating December cuts weren’t a “foregone conclusion.” This triggered a pointy greenback rally and despatched 10-year yields spiking to 4.10%. The Financial institution of Canada additionally minimize charges however signaled its easing cycle could also be over, whereas Australia’s scorching CPI all however dominated out a November RBA minimize.
Commerce Truce and Central Financial institution Surprises (Thursday-Friday): U.S. President Trump boasted that the assembly with Chinese language President Xi was “unimaginable” and boasted of the tariffs truce that quickly de-escalated commerce tensions. Volatility remained elevated within the foreign exchange scene, because the BOJ downplayed its hawkish tilt and cited the necessity to look ahead to extra information earlier than tightening. In the meantime, the ECB additionally stored charges unchanged however paid additional shut consideration to exterior dangers from commerce and geopolitics that would alter its coverage path.
AUD/NZD: Bullish Occasion Final result + Threat-Off Situation
= Arguably good odds of a web constructive final result
AUD/NZD 1-Hour Foreign exchange Chart by TradingView
This setup targeted on a protracted bias and sure delivered exceptionally properly all through the week. After the unique dialogue, AUD/NZD broke above its October pattern line resistance forward of the CPI launch and was hovering close to the 1.1400 psychological stage and R2 Pivot Level at 1.1394 when the Australian inflation information hit the wires.
The warmer-than-expected CPI print sparked an instantaneous validation of basic Aussie lengthy bias, confirmed by AUD/NZD’s transfer to interrupt above R2 instantly. After a fast consolidation & pullback, the pair retested the R2 Pivot Level resistance-turned-support earlier than climbing to new weekly highs as the basic sentiment favored Aussie over the Kiwi.
The bullish transfer earlier than the tip of the week was probably fueled by a transparent basic hole between the 2 currencies. Australia’s inflation shock stored the RBA leaning cautious on fee cuts, whereas New Zealand’s weak information, together with the ANZ Roy Morgan confidence drop to 92.4, added some stress on Kiwi. Even with Powell’s hawkish FOMC tone shaking threat sentiment midweek, the pair held agency at key assist earlier than pushing increased once more.
Due to the pullback, some commerce administration components a person would have made would have probably influenced the diploma of a commerce final result, however as a result of AUD/NZD closed the week above the dialogue value space and put up occasion value space, this dialogue would extremely probably have generated a web constructive final result for many commerce methods.
Not Eligible to maneuver past Watchlist – Bearish AUD Setups and AUD/USD
AUD/USD: Bullish AUD Occasion Final result + Threat-On Situation
AUD/USD 1-Hour Foreign exchange Chart by TradingView
AUD/USD began the week robust, breaking above the .6525 triangle resistance forward of the CPI launch. The warmer inflation print sparked a fast rally, with the Aussie gaining broadly, particularly towards GBP and NZD.
However Powell’s hawkish FOMC tone midweek flipped USD sentiment mid-week, pushing the greenback increased, which in our opinion, successfully weakened our conviction or invalidated being lengthy biased on AUD/USD.
That FOMC occasion promptly had AUD/USD Foreign exchange merchants again in promote mode, forcing the pair to offer again a lot of its post-CPI pop. For anybody who ignored USD basic developments and tried to lengthy AUD/USD probably noticed a really destructive final result by the tip of the week, it doesn’t matter what buying and selling type / technique might have been deployed.
AUD/CAD: Bearish Occasion Final result + Threat-On Setting
AUD/CAD 1-Hour Foreign exchange Chart by TradingView
The result of the goal occasion didn’t favor bearish AUD setups, as Australia’s CPI surged above expectations and the RBA’s goal vary. The result plus the bullish sentiment within the pair earlier than the occasion invalidated the AUD/CAD dialogue, making it unsuitable to maneuver past the watchlist part.
Submit Australian CPI occasion, the Loonie really benefited from a rebound in crude oil costs spurred by resurfacing Russian geopolitical tensions and U.S. sanctions. Mixed with considerably much less dovish commentary from the BOC mid-week, that is probably why AUD/CAD pulled again decrease and the pair fell right into a consolidation sample, as bulls from either side butted heads within the pair for the remainder of the week.
EUR/AUD: Bearish Occasion Final result + Threat-Off Setting
EUR/AUD 1-Hour Foreign exchange Chart by TradingView
This setup assumed weaker Australian inflation would set off AUD promoting, positioning EUR/AUD for a bounce from the center of its long-term vary. The warmer-than-expected CPI invalidated this thesis from the outset.
Whereas risk-off flows did periodically assist safe-haven currencies like EUR throughout mid-week volatility following Powell’s hawkish tone, the basic case for AUD power overwhelmed these momentary shifts. EUR/AUD remained underneath stress all through the week because the inflation shock strengthened expectations for continued RBA warning on potential fee cuts, and because the euro noticed a little bit of weak spot because the U.S. greenback discovered power within the latter half of the week.
The Verdict
Australia’s upside inflation shock strongly supported bullish AUD alternatives, with AUD/NZD shifting past the Watchlist part as a viable candidate for stay threat publicity. The warmer-than-expected CPI studying—which pushed headline inflation to three.2% y/y and above the RBA’s goal vary—strengthened the case for prolonged coverage warning from the central financial institution.
The AUD/NZD lengthy bias emerged as a probable winner as properly. The pair’s upside was confirmed instantly following the CPI launch, and probably drew in basic bulls, particularly after the retest of the damaged Pivot resistance ranges. The basic divergence between sticky Australian inflation and softer New Zealand information assist a compelling basic narrative that proved resilient even when broader threat sentiment shifted mid-week.
General we fee our watchlist discussions as “extremely probably” supportive of a constructive final result because the bullish AUD bias mixed with a posh but barely risk-off market setting surrounding the goal occasion enabled AUD/NZD to capitalize on the stronger than anticipated CPI outcomes.
Key Takeaways:
Basic Divergence Beats Threat Sentiment
Whilst threat urge for food shifted midweek after Powell’s hawkish tone, AUD/NZD stored rallying due to Australia’s sticky inflation and New Zealand’s weak information. Robust fundamentals outweighed shifting market temper.
Utility: When buying and selling event-driven crosses, concentrate on basic divergence. Stable macro tales endure; sentiment-driven pairs usually don’t.
Handle Timing Round Main Occasions
The CPI launch landed proper earlier than central financial institution conferences/statements and necessary commerce occasions, making a catalyst-packed week that demanded tighter threat management.
Utility: When a number of occasions crowd the calendar, plan exits and threat trims early. Energetic administration between catalysts can imply the distinction between revenue and drawdown.
Technical and Basic Alignment Boosts Conviction
AUD/NZD had already damaged its pattern line earlier than the CPI launch, and the inflation beat confirmed the setup.
Utility: Favor setups the place technicals and fundamentals align. When value motion helps your bias forward of an occasion, momentum often lasts longer and risk-reward improves.
Disclaimer: The foreign exchange evaluation content material offered in Babypips.com is meant solely for informational functions solely. The technical and basic situations mentioned are introduced to focus on and educate on the way to spot potential market alternatives that will warrant additional impartial analysis and due diligence. This content material reveals how we cowl a portion of the total buying and selling course of, and doesn’t represent that we ever give particular funding or buying and selling recommendation. The setups and analyses introduced on Babypips.com are very probably not appropriate for all portfolios or buying and selling kinds.
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