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 Boosted by CPI Data

Last updated 1/25/2012 3:10 AM ET (GMT -5) 0 Comments - Add your comment

• Share this:

Boris Schlossberg

Director of Currency Research, GFT

Currencies spent a quiet session in Asian trade with many of regional markets still on holiday for Chinese New Year. The only significant price action came from Australia where CPI data revealed declining price pressures but not as dovish as the market had hoped, raising small doubts about the possible RBA rate cut in February.

Australian headline CPI printed cooler than expected at 0.0% versus 0.2%, but the trimmed mean data was actually hotter at 0.6% versus 0.5% forecast. The stronger than expected core numbers created some confusion in the market and spurred a short covering rally in AUD/USD.  

Most market players continue to believe that the RBA will cut rates by 25bp at its next meeting in February, but the recent batch of economic data has been ambiguous enough  to have created some uncertainty as to the central banks intent.  For example, although the latest employment data was far below expectations when the country reported a loss of 29K jobs, the headline number was somewhat misleading given the fact that all of the losses occurred in the temporary sector while permanent jobs actually increased by 24K. The similar disconnect in the inflation readings have left just enough doubt in the mind of the market to have prompted some aggressive shorts to cover.

The Aussie recovered above the 1.0500 level and remains well bid into the European open. If risk flows prove supportive, it could make another run at the 1.0600 level as the day proceeds.

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.