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Forex Signal (Mon April 26 2011, 9:30pm NY Time EST) - AU CPI q/q

Discussion in 'Current Forex Trading Signals' started by Henry Liu, Apr 25, 2011.

  1. Henry Liu

    Henry Liu Former FPA Special Consultant

    Jul 5, 2010
    Likes Received:
    Our plan to trade today’s CPI release out of Australia will be to look for opportunities for entry if we get a surprise in this release, here is the current forecast:

    9:30pm AU CPI q/q Forecast 1.2% Previous 0.4%
    ACTION: AUD/USD BUY 1.5% SELL 0.9%

    The Trade Plan

    Here is the plan, if we get a better than expected CPI data, we should see an instant appreciation of AUD by at least of 40 pips within the hour, but if we get a worse than expected number, AUD should drop and we should expect the market to consolidate. Of course, the deviation that I am looking for must be at least 0.3%, or I will skip the after news trade…

    On a minimum release of 1.5%, I would buy AUD/USD after a decent retracement. If we get a 0.9% or worse release, I’d SELL AUD/USD immediately, I would consider a spike trade on a worse than expected release as recent gains in the AUD are screaming for a strong correction.

    For more information on my trading methods, please read:
    Henry Liu's Trading Method

    The Market
    Global inflation is still on the rise and the RBA should continue its trend of raising inflation numbers. The quarterly CPI release should rise by about 1.2% due to a spike in commodity prices and the recent release of the Producer Price Index for the first quarter.

    If expectations are met between 1.2% and 1.5%, the Aussie will move up slightly. Anyhting greater than expected should have the Aussie settle on higher ground.

    Additional Thoughts
    Inflationary pressure could be the last thing that RBA wants to see as global economy slows down, especially with China actively curbing its inflation. In the scenario of a weaker release, AUDUSD could drop below the 1.0650 level shortly in my opinion; however, on a stronger release, 1.0850 would be the logical resistance.

    Pre-News Consideration
    There should be no pre-news consideration for this release.

    “The Consumer Price Index (CPI) measures the rate of inflation (i.e., the rate of price changes) experienced by consumers when purchasing goods and services. A rising trend has a positive effect on the nation’s currency. The primary objective of the central bank is to achieve price stability; when inflation rises above an annualized rate of approximately 2%, they will respond by raising interest rates to bring prices down. Higher interest rates attract foreign investment, thus increasing demand for the nation’s currency. CPI is one of the most closely watched indicators and will usually have a high impact upon release.”

    Historical Chart and Data for AU CPI q/q


    #1 Henry Liu, Apr 25, 2011
    Lasted edited by : Sep 8, 2016

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