All Trade Ideas and trading scenarios found on FX360.com are hypothetical. FX360.com has not placed these Ideas in a live trading environment. Forex Trading involves high risks, with the potential for substantial losses that exceed your initial deposit and is not suitable for all persons. Past performance is not necessarily indicative of futures results.

Aussie Tripped by Weaker CPI

Last updated 10/26/2011 4:14 AM ET (GMT -5) 0 Comments - Add your comment

• Share this:

Boris Schlossberg

Director of Currency Research, GFT

The Australian dollar was one of the weaker performers of the night in the wake of much lower than expected CPI readings that showed inflation is slowing to it s lowest pace in more than three years. Headline CPI in Australia matched expectations rising by 0.6% versus 0.6% forecast, but the trimmed mean number was markedly lower at 0.3% versus 0.7% eyed.

The sharp decline in the trimmed mean readings was partly due to a new seasonal adjustment methodology used by the Australian Bureau of Statistics that lowered the weight of loan and deposit facilities and increased the weight of computer equipment.   Overall the tradables component CPI fell -0.2% lead by a sharp decline in pharmaceuticals while the non-tradables component rose 1.2% due mainly to increases in electricity.

Overall the muted inflation  data allows the RBA the freedom to lower rates should it choose to do so, but so far the central bank has remained steadfastly neutral giving no indication that it sees a need to ease monetary policy just yet. Nevertheless, the possibility of a rate cut weighed on the Aussie for most of Asian session trade as the pair drifted near the session lows of 1.0370 in the aftermath of the dovish data.  With no fresh developments out of Brussels risk currencies remained moribund into early morning European dealing and if equities begin to weaken as teh day proceeds Aussie could fall further towards the 1.0300 level.

The information, including Commentary and Trade Ideas, provided on FX360.com should not be relied upon as a substitute for extensive independent research which should be performed before making your investment decisions. Global Forex Trading and FX360 .com is merely providing this information for your general information. The information and opinions presented do not take into account any particular individual’s investment objectives, financial situation, or needs. All investors should obtain advice based on their unique situation before making any investment decision and should tailor the trade size and leverage of their trading to their personal risk appetite. Any projections or views of the market provided by FX360.com may not prove to be accurate.

The views of the authors and analysts are not necessarily those of Global Forex Trading, its owners, officers, agents or other employees. FX360.com and the currency research team will not be responsible for any losses incurred on investments made by readers and clients as a result of any information contained on FX360.com. Global Forex Trading and the currency research team do not render investment, legal, accounting, tax, or other professional advice. If investment, legal, tax, or other expert assistance is required, the services of a competent professional should be sought.

Loading...

About The Author

Boris Schlossberg began his Wall Street trading career more than 20 years ago at Drexel Burhnam Lambert. There, he traded nearly every type of financial product on the market in the U.S., from equities and options to stock index futures and foreign exchange. His innate ability to analyze market information and use it to trade has helped him become an industry-recognized, “go to” trading professional.

These days, whenever the markets move, many organizations turn to Schlossberg for his take on the situation. He is a weekly contributor to CNBC's Squawk Box and a regular commentator for Bloomberg radio and television. His daily currency research is widely quoted by Reuters, Dow Jones and Agence France Presse newswires and appears in numerous newspapers worldwide. Schlossberg has written for publications like SFO magazine, Active Trader and Technical Analysis of Stocks and Commodities. He is also the author of Technical Analysis of the Currency Market and the co-author of Millionaire Traders: How Everyday People Are Beating Wall Street at Its Own Game with Kathy Lien. He joined GFT in 2008.