The Week Ahead: AU Budget, US CPI, Cisco earnings

It is set to be a pivotal week for ANZ traders, with Australia’s federal budget on Tuesday evening and key US inflation data released the same morning taking centre stage. The combination of the Australian Federal Budget and US CPI could heavily influence regional sentiment, with direct implications for the AUD/USD and NZD/USD, RBA and RBNZ rate expectations, commodity prices, and risk appetite for the ASX 200 and NZX 50. US producer prices follow on Wednesday, while several European CPI releases will also shape global central bank outlooks. Meanwhile, US earnings season continues, with Cisco and Alibaba among the key names reporting.

Australian Federal Budget

Tuesday 12 May

The Australian federal budget, handed down on Tuesday evening, is a key focus for local markets. With global geopolitical tensions and domestic inflation pressures in the backdrop, investors will scrutinise details on government spending, NDIS and defence outlays, and proposed tax reforms including potential changes to capital gains tax discounts and negative gearing.

Fears of increased spending adding to inflationary pressures, or tax shifts deterring investment, have already contributed to recent ASX 200 volatility. A fiscally disciplined outcome with credible productivity measures could support investor confidence and the AUD, while looser settings may weigh on rate-cut expectations and risk assets.

S&P/ASX 200, 1 Month

^{Source: TradingView}

US April CPI

Tuesday 12 May

Economists expect the headline measure of US inflation to show that consumer prices rose 0.6% month-on-month and 3.7% year-on-year in April, fluctuating from 0.9% and 3.3%, respectively, a month earlier.

At the same time, core CPI, which excludes volatile food and energy prices, is forecast to have increased 0.4% month-on-month and 2.7% year-on-year in April, up from the March readings of 0.2% and 2.6%, respectively.

The April inflation figures will be closely watched for their effect on the AUD/USD pair, which has recently traded around the 0.72–0.7250 level. Stronger-than-expected US CPI data would typically support the US dollar, putting downward pressure on the Aussie. Softer readings could weigh on the greenback and allow AUD/USD to push higher.

A sustained break above 0.7300 could open the way toward 0.7400, while renewed USD strength may see the pair retest support near 0.7150–0.7100. With the Australian budget released the same evening, any notable USD reaction will add to local volatility as investors assess the combined impact on rate expectations (RBA vs Fed) and risk appetite for ASX-listed stocks.

AUD/USD, 5 Days

^{Sources: TradingView}

Cisco Q3 earnings

Wednesday 13 May

Cisco is expected to report that its third-quarter earnings grew 7.8% to $1.04 a share, as revenue increased about 10% to $15.6bn, based on analysts' estimates. Gross profit margins are forecast to have tightened to 66.2%, down from 67.5% in the previous quarter. Looking ahead to Q4, analysts see earnings rising 8.4% to $1.07 a share, with revenue projected to climb 7.8% to $15.8bn and margins set to expand slightly to 66.5%.

The options market implies that shares of the Nasdaq-listed technology firm – up more than 20% this year at about $92 – could move 5.9% in either direction following the Q3 earnings release. Implied volatility on Cisco options expiring on 15 May is relatively modest at around 60%, while positioning appears skewed to the upside. This could leave the shares exposed to a pullback if analysts' expectations are not met. Options-related data suggests that support is near $77.50 and resistance is around $100.

Technical analysis paints a slightly different picture, with support around $85 and resistance at about $95. The stock remains in an uptrend but is approaching the upper Bollinger Band, while the relative strength index (RSI) is approaching 70, typically considered overbought territory. This may indicate that the stock could be nearing a top, with the potential for a short-term pullback, particularly if the results fail to deliver an upside surprise.

Cisco Systems share price, July 2025 - present

^{Sources: TradingView, Michael Kramer}

Economic and company events calendar

Major scheduled economic announcements and selected earnings announcements from US- and UK-listed companies include:

Monday 11 May
- China: April consumer price index (CPI)
Results: Barrick Mining (Q1), Constellation Energy (Q1), Fox (Q3)

Tuesday 12 May
- Australia: Annual budget release, May Westpac consumer confidence
- Germany: April CPI
- UK: April like-for-like retail sales
- US: April CPI
Results: JD.com (Q1), Sea Limited (Q1), Vodafone (FY)

Wednesday 13 May
- Eurozone: Q1 flash gross domestic product (GDP)
- France: April CPI
- New Zealand: Q2 inflation expectations
- US: April producer price index (PPI)
Results: Alibaba (FY), Birkenstock (Q2), Cisco (Q3), Dynatrace (Q4), Tower Semiconductor (Q1)

Thursday 14 May
- UK: Q1 flash GDP
- US: April retail sales, weekly initial jobless claims
Results: Applied Materials (Q2), Burberry (FY), ITV (Q1), Klarna (Q1), National Grid (FY), Nu (Q1), Viking (Q1)

Friday 15 May
- US: April industrial production
Results: RBC Bearings (Q4)

Note: Announcements and dates are subject to change. Cross-check times in your timezone using the platform market calendar.

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