Australia CPI q/q 01/26/10

7:30pm AU CPI q/q         Forecast 0.4%      Previous 1.0%
ACTION: AUD/USD        BUY 0.7%      SELL 0.0%

We’ll be lookign to trade the quarterly CPI release out of Australia.  As reflected in recent RBA rate statements, Australia is facing  rise in inflation, and this number could surprise to the upside.  RBA hiked rates last few rate decisions, and with a surprise better than expected release, we could have justification for further rate hike. 

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, there fore we should expect market to consolidate.  Of course, the deviation that I am looking for must be at least 0.3%, or I will skip the trade.

CPI 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.”

Related posts:

1. New Zealand CPI q/q 10/14/09
2. RBA Cash Rate Decision 11/30/09 (Interest Rate Decision)
3. Australia Monetary Policy Meeting Minutes 10/19/09
4. Australia Employment Changes 11/11/09
5. Australia Employment Changes 12/09/09
6. RBA Cash Rate Decision 02/01/10
7. Australia Employment Changes m/m 09/09/09
8. RBA Cash Rate Decision 11/02/09
9. ECB Minimum Bid Rate Decision (Interest rate decision) 12/03/09
10. Australia GDP q/q 12/15/09