AUD/USD’s Subdued Reaction to CPI

October 27, 2016

And there goes Australian CPI for another quarter.

AUD CPI q/q: 0.7% v 0.5% expected, and 0.4% previous.


The headline beat saw the Aussie Dollar initially shoot skyward, but gains were short lived as price fell back down through London and New York.

This was because the core inflation number was subdued, coming in at 1.3% v the 1.4% expected. This is the figure that the RBA keeps a close eye on when making monetary policy decisions and the sober reading is the one that everyone is now talking about and putting pressure on the Aussie.

Check out yesterday’s AUD/USD charts and the way that price is still reacting around the daily trend line resistance level that we were talking about.

AUD/USD Hourly:
161027_audusd_hourly
Click on chart to see a larger view.

The CPI beat gave price the instant kick, but concerns around the core inflation level possibly keeping the door for the RBA to cut ajar (something I don’t exactly agree will happen) meant that as soon as we hit London session, price was smacked back down.

On that hourly chart, I’ve highlighted how easy it is to find intra-day levels to manage your risk around. At the time of publishing, that right there is something like a 10 pip stop offering crazy-good risk:reward on the trend line reactivation if you’re ultra aggressive.

There’s certainly plenty of opportunity in these types of levels.

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On the Calendar Thursday:
NZD Trade Balance

GBP Prelim GDP q/q

USD Core Durable Goods Orders m/m
USD Unemployment Claims

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Dane Williams – @VantageFX

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