Henry Liu
Former FPA Special Consultant
- Messages
- 473
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:
7:30pm AU CPI q/q Forecast 0.7% Previous 0.7%
ACTION: AUD/USD BUY 1.0% SELL 0.4%
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 1.0%, I would buy AUD/USD after a decent retracement. If we get a 0.4% 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 is screaming for a strong correction.
For more information on my trading methods, please read:
Henry Liu's Trading Methods
The Market
The quarterly CPI release is showing that Australia is still under inflationary pressure, and if this number surprises to the upside, we could see steady demand for AUD, at least temporarily. RBA has paused rates hikes for the last meeting and with a surprise higher release, expectations for further rate hike from RBA could return.
However, with Sunday's PPI release From Australia at 0.1% versus 0.5% of expectation, market could be looking for a possible lower than expected release, or at least, future outlook for inflation should start to decline... making RBA Interest Rate decision in early February a difficult one to justify for rate hike.
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 0.9800 level shortly in my opinion; however, on a stronger release, 1.0100 would be the logical resistance.
Pre-News Consideration
There should be no pre-news consideration for this release.
Definition
“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.”
Click here for historical chart and data on AU CPI q/q
Thanks,
7:30pm AU CPI q/q Forecast 0.7% Previous 0.7%
ACTION: AUD/USD BUY 1.0% SELL 0.4%
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 1.0%, I would buy AUD/USD after a decent retracement. If we get a 0.4% 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 is screaming for a strong correction.
For more information on my trading methods, please read:
Henry Liu's Trading Methods
The Market
The quarterly CPI release is showing that Australia is still under inflationary pressure, and if this number surprises to the upside, we could see steady demand for AUD, at least temporarily. RBA has paused rates hikes for the last meeting and with a surprise higher release, expectations for further rate hike from RBA could return.
However, with Sunday's PPI release From Australia at 0.1% versus 0.5% of expectation, market could be looking for a possible lower than expected release, or at least, future outlook for inflation should start to decline... making RBA Interest Rate decision in early February a difficult one to justify for rate hike.
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 0.9800 level shortly in my opinion; however, on a stronger release, 1.0100 would be the logical resistance.
Pre-News Consideration
There should be no pre-news consideration for this release.
Definition
“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.”
Click here for historical chart and data on AU CPI q/q
Thanks,
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