Australia's August CPI due after RBA's 25bp cash rate hike; headline seen at 4.0%

The Australian dollar offers the clearest signal from the release. A figure matching or exceeding forecasts would bolster the case for additional tightening and may lift the currency along with short-dated yields. A weaker reading, especially in the trimmed mean, would raise doubts about how much further the central bank might have to go. Since the RBA has already raised rates, the data will influence expectations for the next decision, not the one already delivered. For oil, the channel is less direct, running through the Australian dollar and wider risk sentiment.

Australia's August CPI report lands one day after the RBA's move, with headline inflation projected to pick up to 4.0% and the underlying trimmed mean expected to stay at 3.6%.

Summary:

• August CPI will be published at 01:30 GMT on Wednesday, September 30, or 21:30 US Eastern time on Tuesday, September 29.
• The data comes after the Reserve Bank of Australia's 25 basis point cash rate increase on Tuesday, September 29.
• Headline CPI is seen at 4.0% year on year, compared with a previous reading of 3.5%.
• Monthly CPI is projected at 0.4%, down from 1.0% earlier.
• Trimmed mean is seen holding at 3.6% year on year and at 0.3% month on month, versus 0.5% in the prior period.

Australia publishes its August consumer price data on Wednesday, September 30, at 01:30 GMT, corresponding to 21:30 US Eastern time on Tuesday, September 29. The data comes just one day after the Reserve Bank of Australia lifted the cash rate by 25 basis points, leaving traders to look for clues about the bank's next move.

The forecasts imply a quicker headline rate. Year-on-year CPI is expected to climb to 4.0% from 3.5%. Month on month, prices are seen rising 0.4%, a slower advance than the previous 1.0%. That mix points to the annual figure being helped at least partly by comparisons with earlier months rather than by a fresh burst of price pressure, though the projections themselves cannot settle that question.

The trimmed mean, which strips out the most extreme price moves, is often the gauge policymakers watch most for underlying pressure. The projected path here is more stable. The yearly rate is forecast to stay at 3.6%, matching the prior reading, and the monthly rate at 0.3%, down from 0.5%. Figures close to those forecasts would show underlying inflation remaining elevated rather than picking up speed.

The stakes are raised by the RBA's recent move. A number at or above forecast, particularly in trimmed mean, would strengthen the case for more hikes. A subdued number would give investors grounds to doubt that path. The gap between headline and underlying readings is likely to drive the market response, as a strong top-line figure with a soft trimmed mean would send conflicting signals.

Attention now shifts to the RBA's guidance and the next set of data to determine whether the latest increase starts a sequence or remains a one-off.