Australian CPI data expected to reveal inflation remains above the RBA’s target band

The latest official Australian CPI data will be released on Wednesday the 7th of January, 2026.

Forecasters predict lower but still above target inflation

Economists forecast that Australian inflation moderated in December but remains above the RBA’s 2% to 3% target band. Headline inflation is predicted to ease to 3.6% while the more important trimmed mean measure is forecast to fall to 3.2%. That’s from a rise in November of 3.8% on a headline basis and 3.3% on a trimmed mean basis.

Australian inflation has accelerated above the Reserve Bank of Australia’s target in recent months, with the central bank pivoting its commentary about future monetary policy and revising its inflation forecasts as a result. The RBA points to a persistent supply and demand imbalance that could see inflation remain above target well into 2026, despite historically modest GDP growth.

(Source: RBA)

AUD/USD hovers around 12 month high on policy divergence

Persistent inflationary pressures are leading market participants to price-in that the next move from the RBA will be a hike. Currently, cash rate futures imply a hike from the RBA by August, with a 50-50 chance of another hike after that baked-in.

The dynamic has supported the AUD/USD as policy expectations between the US and Australia diverge. Rising odds of future RBA hikes are combining with expectations of further US rate cuts to widen yield spreads and put upward pressure on the pair, with the trend the dominant driver since the end of November.

(Source: Trading View)
(Past performance is not a reliable indicator of future results)

The AUD/USD remains in a short-term uptrend, marked by higher-highs and lower lows. Upward sloping trendline support is a key short-term level for the pair, with a break below that level opening up the 20-day moving average as the next noteworthy level. Meanwhile, resistance appears to be around 0.6730, a break of which would potentially confirm the continuation of the uptrend.

(Source: Trading View)
(Past performance is not a reliable indicator of future results)