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Forex Signal (Tue, July 27 2010, 9:30pm NY Time EST) - AU CPI q/q

Discussion in 'Current Forex Trading Signals' started by Henry Liu, Jul 26, 2010.

  1. Henry Liu

    Henry Liu Former FPA Special Consultant

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    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 1.0% Previous 0.9%
    ACTION: AUD/USD BUY 1.2% SELL 0.7%


    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 as traders will probably feel uncertain over whether or not RBA will hike rate during the next meeting, therefore we should expect the market to consolidate. Of course, the deviation that I am looking for must be at least 0.2~0.3%, or I will skip the after news trade…

    On a minimum release of 1.2%, I would buy AUD/USD after a decent retracement. If we get a 0.7% 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 facing rise in inflation, and if this number surprises to the upside, we could see demand for AUD return to the market, at least temporarily. RBA has paused rates hikes for several meetings and with a surprise higher release expectation for further rate hike could return.

    In the political front, RBA Stevens may hurt Labor Prime Minister Gillard's bid if RBA hikes rate next Tuesday; however, with China's demand for commodities on the rise (at least based on present data), and record low unemployment rate, RBA may not have a choice but to resume rate tightening cycle if today's CPI release for the quarter shows stronger than 1.2%.

    Current Overnight Swap Index is pricing in about 25% of a rate hike for next week, however, if the release shows that Australia's economy is heating up faster than expected, sentiment should change for AUD.

    On the other hand, with AUD/USD currently above the 0.90 level, consolidation is long overdue. If CPI release shows that the economy is leveling off, or 0.7% or less, the long-term trend for the AUD could also change from neutral to slightly bearish as it would take a lot of momentum & optimism to keep AUD/USD trading at the current level.

    Additional Thoughts
    Inflation could be a real concern for Australia as unemployment drops and supplies for skilled workers also drop, wages gain will be the next step as long as the mining boom remains active. This will add pressure to RBA for further rate hikes, but at the same time, RBA is also considering its bubble economy that's highly dependent of China's commodity demands. If China's growth cools down or worse yet, government intervenes, then the entire house of cards will come crashing down, and the higher the interest rate is, the harder the economy will fall.

    Pre-News Consideration
    We may get a chance to go LONG on AUD/USD on the expectation of a strong CPI release. However, with AUD/USD trading at the top of the range, it may be best to sit this one out, but if you are looking for direction on the AUD/USD for the short-term until the CPI release, I'd bet on going LONG after it dips to support areas based on 4 hour chart.

    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,


    [​IMG]
     
    #1 Henry Liu, Jul 26, 2010
    Lasted edited by : Sep 8, 2016
  2. sonny77

    sonny77 Private

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    Hi...Henry

    Thank you for your kind attention.

    My regards
     
  3. dkami

    dkami Sergeant

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    Thanks for sharing keep up the good work Henry:)but man this get confusing AU CPI in NY time
     
    #3 dkami, Jul 27, 2010
    Last edited: Jul 27, 2010
  4. balu

    balu Recruit

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    Hi Henry

    Thanks for the info. how do i get the live news from different county's.

    Thanks
     
  5. Codetrader

    Codetrader Recruit

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    Where to locate News Releases

    Hi Henry, I am new here so please forgive me if I am asking for information that has already been released.

    I am trying to find a central location where news reports are released concerning all the information needed to trade your advice.

    Example: Where would I find the news report to see what was released this morning from Australia concering interest rates? And so on: all the counties....is there a central location or can you please supply a list of all links to all countires?

    Thank you Henry!
    BobH
     
  6. tmmbabs

    tmmbabs Recruit

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    Recent News Pls

    Please Were Do I Get The News, Or Can You Update Us Were To Know The Current News. Is 1000 Am Ny Time Now, I Want To Trade The Aud/usd But There Is No Recent News To Back Up Your Forecast. Can You Please Do Us A Favor By Coming To The Forum Immediately The Release And Tell Us What Happen
    Thank You Sir
    Waiting For Reply
     
  7. Huwee

    Huwee Corporal

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    Hi tmmbabs,

    You can get a lot of news by going to "Forex Calendar & Tools" (in this website's menu bar near the top), and then clicking on "Forex News Calendar".

    As this is a free news service there is a slight delay. From a previous posting of Henry's:
    Hope this helps!

    Huwee.

    p.s. Thanks Henry! :- )
     
  8. Jorge Varon Toro

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    broker that I can use?

    hello sir Liu

    thank you very much for you work you do with your analysis.

    please can you recommend some brokers, because none has served me?
    I always get requotes and slippage.

    thanks for your help
     
  9. alanshawn

    alanshawn Private

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    Hi Henry
    For trading the news is Forex diamonds still available?
    Thanks
     
  10. truthisoutthere

    truthisoutthere Recruit

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    News Releases



    Try here:- https://www.fasteconomicnews.com/default.aspx
     

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