Fed Inflation Target Achievable:
After having declined for the previous 2 months, the US Consumer Price Index rose 0.2% in October.
The 0.2% increase implies that factors such as a strong USD and lower oil prices contributing to cheaper gas prices at the pump for US drivers are no longer holding inflation down like they have been.
Stubbornly low inflation has been a big sticking point for the Fed moving forward and this print now makes the Fed’s consistent 2% inflation target highly achievable. Combine this inflation number with the most recent excellent NFP print and all the boxes look to have been ticked.
This chart really grabbed my attention as I was flicking through Bloomberg this morning, showing just how much expectations for a December hike have accelerated over the last month.
Now we’re starting to move toward a ‘sure thing’, opportunity the other way could start to present itself. A factor to consider in your trading, and something we will be taking a closer look at as we head toward December.
The Aussie Outperforms:
The one Forex chart I wanted to highlight before wrapping up is the Aussie Dollar.
Click on chart to see a larger view.
The Aussie is currently outperforming the other majors which on the back of lower commodity prices and relatively stellar inflation numbers out of the US raises some questions.
I’ve included the weekly chart because once again this major higher time frame level is the only one that matters. With price still chopping back and forward through the subjective weekly trend line, you can’t yet call it a break. I have today added the parallel which interestingly lines up quite well to highlight the sideways price action we are seeing as major support continues to hold.
Now we’ve had a few more weekly candles since the post on the subjective weekly trend line, leave us a comment in the box below or mention @VantageFX on Twitter. We’d love to hear your thoughts on the level and where you think the Aussie is headed from here.
On the Calendar Wednesday:
AUD RBA Assist Gov Debelle Speaks
AUD Wage Price Index q/q
USD Building Permits
USD FOMC Meeting Minutes
Keep in mind that both Debelle and Australian Wage Price Index data are only tier 2 releases, while the FOMC Meeting Minutes come much later, at 7pm GMT.
Chart of the Day:
From Monday’s ‘Trading Gold & Silver‘ blog post in the Technical Analysis section of the Vantage FX News Centre:
“Gold has found short term support at its most recent swing low but all the higher time-frames are pointing to continued downside. And we haven’t even mentioned the Fed!”
After looking for further weakness in both Gold and Silver at the beginning of the week, we already find ourselves back at swing lows and the commodity in play.
Click on chart to see a larger view.
The push off lows was very short lived, exposing huge weakness on the side of the buyers.
Flick up to the weekly chart to see what’s next and remember you still have the possibility of a lagging silver move with a tighter zone to manage your risk around.
Do you see opportunity trading Gold?
Dane Williams – @VantageFX
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