News & Analysis at your fingertips.

We use a range of cookies to give you the best possible browsing experience. By continuing to use this website, you agree to our use of cookies.
You can learn more about our cookie policy here, or by following the link at the bottom of any page on our site.

0

Notifications

Notifications below are based on filters which can be adjusted via Economic and Webinar Calendar pages.

Live Webinar

Live Webinar Events

0

Economic Calendar

Economic Calendar Events

0
Free Trading Guides
Subscribe
Please try again
EUR/USD
Bearish
Low
High
of clients are net long.
of clients are net short.
Long Short

Note: Low and High figures are for the trading day.

Data provided by
Oil - US Crude
Bearish
Low
High
of clients are net long.
of clients are net short.
Long Short

Note: Low and High figures are for the trading day.

Data provided by
Wall Street
Bearish
Low
High
of clients are net long.
of clients are net short.
Long Short

Note: Low and High figures are for the trading day.

Data provided by
Gold
Bearish
GBP/USD
Mixed
USD/JPY
Bearish
More View more
Real Time News
  • Traders utilize varying time frames to speculate in the forex market. The two most common are long- and short-term-time frames which transmits through to trend and trigger charts. Learn more about time-frame analysis here: https://t.co/9S5tXIs3SX https://t.co/T3W8CIg5iy
  • Forex sentiment analysis can be a useful tool to help traders understand and act on price behavior. Learn how to get the most out of understanding trader sentiment here: https://t.co/rJznrXkcYz https://t.co/FPgZ5gkgrM
  • Key levels in forex tend to draw attention to traders in the market. These are psychological prices which tie into the human psyche and way of thinking. Learn about psychological levels here: https://t.co/8A1QhwMVKo https://t.co/E0KhcKHrOf
  • For some reason an old story has popped up - many apologies.... https://t.co/jHjQxyFRXM
  • The US dollar is unloved, oversold and at lows last seen over 30-months ago. At the moment there seems to be very little reason to buy the greenback. Get your $USD market update from @nickcawley1 here:https://t.co/VY3SLs35cp https://t.co/w5ljByv9cf
  • Trading Forex is not a shortcut to instant wealth, excessive leverage can magnify losses, and sentiment is a powerful indicator. Learn about these principles in depth here: https://t.co/lZFM8youtX https://t.co/CpqePQYF4E
  • GDP (Gross Domestic Product) economic data is deemed highly significant in the forex market. GDP figures are used as an indicator by fundamentalists to gauge the overall health and potential growth of a country. Learn use GDP data to your advantage here: https://t.co/Yl9vM7kO6a https://t.co/Rg2YGZCUCr
  • The non-farm payroll (NFP) figure is a key economic indicator for the United States economy. It is also referred to as the monthly market mover. Find out why it has been given this nickname here: https://t.co/yOUVEEqhc5 https://t.co/ftrbRkFiJF
  • Human error in the forex market is common and often leads to familiar trading mistakes. These trading mistakes crop up particularly with novice traders on a regular basis. Learn about the top ten trading mistakes and how you can avoid them here: https://t.co/i8E2AXtzF3 https://t.co/Hny2HMYo4I
  • (Weekly Fundamental) Australian Dollar Outlook: Tied to Biden Stimulus Bets, S&P 500, US Dollar, Treasuries $AUDUSD #SP500 #stimulusbill #USD https://www.dailyfx.com/forex/fundamental/forecast/weekly/aud/2021/01/16/Australian-Dollar-Outlook-Tied-to-Biden-Stimulus-Bets-SP-500-US-Dollar-Treasuries.html?CHID=9&QPID=917702&utm_source=Twitter&utm_medium=Dubrovsky&utm_campaign=twr https://t.co/H7aus0Aljt
AUDUSD: Trading Australia’s Consumer Price Report

AUDUSD: Trading Australia’s Consumer Price Report

2012-04-23 20:00:00
David Song, Strategist

Trading the News: Australia Consumer Price Index

What’s Expected:

Time of release: 04/24/2012 1:30 GMT, 21:30 EDT

Primary Pair Impact: AUDUSD

Expected: 2.2%

Previous: 3.1%

DailyFX Forecast: 2.0% to 2.2%

Why Is This Event Important:

Consumer prices in Australia are expected to increase 2.2% in the first quarter after expanding 3.1% during the last three-months of 2011, and the slower rate of inflation could spark a sharp selloff in the AUDUSD as it heightens speculation for a rate cut. As the Reserve Bank of Australia maintains a cautious outlook for the $1T economy, a soft inflation report would certainly increase the central bank’s scope to combat the slowing recovery, and we may see the RBA carry out its easing cycle throughout 2012 in an effort to balance the risks surrounding the region. According to Credit Suisse overnight index swaps, market participants are pricing nearly 100bps worth of rate cuts over the next 12-months, and the downturn in interest rate expectations reinforce a bearish outlook for the AUDUSD as it carves out a major top in 2012.

Recent Economic Developments

The Upside

Release

Expected

Actual

Employment Change (MAR)

6.5K

44.0K

Unemployment Rate (MAR)

5.3%

5.2%

Consumer Inflation Expectation (APR)

--

3.3%

The Downside

Release

Expected

Actual

Producer Price Index (YoY) (1Q)

2.2%

1.4%

Export Price Index (QoQ) (1Q)

-3.0%

-7.0%

Import Price Index (QoQ) (1Q)

-0.1%

-1.2%

The jump in employment paired with the rise in inflation expectations could generate an above-forecast CPI print, and a stronger rate of price growth may lead the AUDUSD to retrace the decline from the previous month as it dampens speculation for lower borrowing costs. However, easing input price pressures should help to alleviate the upside risk for inflation, and we may see the RBA lower the benchmark interest rate further in an effort to encourage a sustainable recovery. In turn, a soft CPI recovery may lead the AUDUSD to give back the rebound from earlier this month, and we may see the pair threaten interim support around 1.0200 as market participants increase bets for a rate cut at the next meeting on May 1.

Potential Price Targets For The Release

AUDUSD_Trading_Australias_Consumer_Price_Report_body_ScreenShot072.png, AUDUSD: Trading Australia’s Consumer Price Report

How To Trade This Event Risk

Forecasts for a slower rate of inflation certainly casts a bearish outlook for the high-yielding currency, but an above-forecast print could set the stage for a long Australian dollar trade as it dampens expectations for a rate cut. Therefore, if the CPI tops 2.2%, we will need to see a green, five-minute candle following the report to generate a buy entry on two-lots of AUDUSD. Once these conditions are met, we will set the initial stop at the nearby swing low or a reasonable distance from the entry, and this risk will establish our first target. The second objective will be based on discretion, and we will move the stop on the second lot to cost once the first trade reaches is mark in order to protect our profits.

In contrast, easing price pressures paired with the protracted recovery certainly dampens the outlook for consumer prices, and a marked slowdown in the headline reading for inflation could spark a sharp selloff in the exchange rate as market participants look for another rate cut. As a result, if the CPI misses expectations, we will implement the same strategy for a short aussie-dollar trade as the long position mentioned above, just in the opposite direction.

Impact that the Australian Consumer Price report has had on AUD during the last quarter

Period

Data Released

Estimate

Actual

Pips Change

(1 Hour post event )

Pips Change

(End of Day post event)

4Q 2011

1/25/2012 0:30 GMT

3.3%

3.1%

+36

+128

4Q 2011 Australian Consumer Price Index

AUDUSD_Trading_Australias_Consumer_Price_Report_body_ScreenShot071.png, AUDUSD: Trading Australia’s Consumer Price Report

Although the headline reading for inflation fell short of market expectations, the stickiness in the core consumer price index sparked a rally in the Australian dollar as the figure unexpectedly advance to 2.6% from 2.4%. Indeed, the uptick in underlying inflation pushed the AUDUSD back above 1.0500, and the high-yielding currency continued to gain ground throughout the day to close at 1.0596.

--- Written by David Song, Currency Analyst

To contact David, e-mail dsong@dailyfx.com. Follow me on Twitter at @DavidJSong

To be added to David's e-mail distribution list, send an e-mail with subject line "Distribution List" to dsong@dailyfx.com.

Questions? Comments? Join us in the DailyFX Forum

View the Expo Presentation on ‘Trading the News’ For Additional Resources

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

DISCLOSURES