Australia Inflation

Consumer prices in Australia were up a seasonally adjusted 0.8 percent in the fourth quarter of 2013 compared to the previous three months, the Australian Bureau of Statistics said on Wednesday.

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2013-01-22 00:30 GMT | [AUD - CPI]

• past data is 1.2%
• forecast data is 0.5%
• actual data is 0.8% according to the latest press release

if actual > forecast = good for currency (for AUD in our case)

AUDUSD M5 : 81 pips price movement by AUD - CPI news event :

AUD/USD rises after higher than expected Q4 inflation

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The Australian dollar rose against the U.S. dollar on Wednesday after higher than expected inflation in the fourth quarter and weaker consumer confidence in January.

According to the Australian Bureau of Statistics, the country's consumer price index for the fourth quarter rose by 0.8% against 1.2% in the earlier quarter. The expectation was for a 0.5% quarterly increase. The year-on-year figure was 2.7% against earlier figure of 2.2% and an expectation of 2.5%.

Earlier, the Westpac-Melbourne Institute index of Australia’s consumer confidence fell 1.7% in January signaling that retail spending will remain weak.

At 0945 local time (0145 GMT) the flash HSBC China purchasing manager's index for January comes out with a previous final reading of 50.5 for December.

The Bank of Japan is scheduled to detail the results of its latest monetary policy review at 1230 local time (0330 GMT) followed by a press conference by Governor Haruhiko Kuroda at 1530 local time (0630 GMT).

AUD/USD traded up 0.52% at 0.8851, USD/JPY traded down 0.06% at 104.22, and NZD/USD traded up 0.01% to 0.8314.

On Tuesday the U.S. dollar traded mixed to higher against most major currencies after the International Monetary Fund hiked its 2014 global growth forecast, while expectations for further cuts to Federal Reserve stimulus programs this month also bolstered the greenback.

In revisions to its World Economic Outlook report published on Tuesday the IMF said it expects the global economy to grow by 3.7% in 2014, up from an October forecast of 3.6% growth.

The news fueled expectations for central banks to wind down stimulus programs such as bond purchases going forward, the Federal Reserve especially, as the multilateral lending institution predicted the U.S. economy to expand 2.8%, up from an October forecast of 2.6%.

Many market participants expect the Fed to trim its quantitative easing program to USD65 billion from the current USD75 billion at its next policy meeting on Jan. 29.

Central bank bond purchases aim to prop up the economy by suppressing long-term interest rates, thus weakening the dollar as a side effect as investors flock to asset classes like stocks.

AUD/USD jumps after Australian CPI data

The AUD/USD rose strongly following inflation data from Australia and jumped from 0.8786 to 0.8855 in seconds, reaching the strongest level since last Thursday, when the employment report was released.

According to the Australian Bureau of Statistics the Consumer price index rose at a rate of 0.8% during the fourth quarter; surpassing analysts expectations for a 0.5%.

On Tuesday the AUD/USD finished practically unchanged after finding resistance at 0.8840 and being unable to consolidate above 0.8800. It was the first time for the AUD/USD not reaching mutli-year lows after four trading days. Following higher-than-expected inflation data the Aussie jumped and at the moment of writing is holding above 0.8840.

AUD/USD – Surges to One Week High near 0.8870

AUD/USD for Wednesday, January 22, 2014

For the best part of the last month the Australian dollar has established and traded within a narrow range roughly between 0.88 and the recent resistance level at 0.90. However for the most part over the last week the Australian dollar has fallen sharply back down to the support level at 0.88 and pushed through moving to a multi-year low near 0.8750 before rallying back towards 0.88. In the last few hours it has surged higher to a one week high near 0.8870 where it appears to be presently consolidating. A week ago the Australian dollar was able to rally higher pushing through the resistance at 0.90 to a one month high near 0.91, however it has since returned to more familiar territory below the resistance level at 0.90. After showing some resilience in early December moving to a one week high above 0.9150, the AUD/USD spent the next two weeks turning around sharply and falling heavily down to a then three month low close to 0.88. After all of its steady good work in the middle of November which saw the AUD/USD steadily move higher from support at 0.93 back up to a one week high near 0.9450, the AUD/USD has since returned all of those gains and then some more.

Throughout most of October the AUD/USD enjoyed a solid and steady move higher from the support level at 0.93 up to the resistance level at 0.95 and beyond to a high around 0.9760. It has been all down hill since then. Throughout the first half of September the AUD/USD enjoyed a solid run which was punctuated by a strong surge higher sending it to a then three month high just above 0.95. A couple of months ago the AUD/USD had been trying valiantly to stay above the support level at 0.89 as all week it placed downward pressure but was unable to sustain any break lower. At the beginning of August it moved very well from three year lows to move back above the key level of 90 cents and beyond to a two week high just above 0.92 to finish out that week.

At the end of July the AUD/USD fell very strongly and appeared to resume the medium term down trend as it moved to a new three year low near 0.8850 but it reversed very well and looked poised to continue back towards the longer term resistance level at 0.93. For the most part of the last week, it moved very little and was quite subdued staying above the support level at 0.94.

Price pressures were less subdued than economists had expected in the final three months of 2013, but they are unlikely to have an impact on Australian interest rates just yet. Australia's CPI for the December quarter rose 0.8 per cent after a 1.2 per cent jump in the September quarter, the Australian Bureau of Statistics said on Wednesday. However, this was stronger than the 0.5 per cent increase expected by economists. The annual inflation rate was 2.7 per cent compared with 2.2 per cent previously, but remains within the Reserve Bank of Australia's (RBA) two to three per cent target band. Economists had forecast a more subdued rise of 0.6 per cent for an annual rate of 2.3 per cent. The RBA will hold its first board meeting of the year on February 4. Financial markets expect the central bank to keep the cash rate at an all-time low of 2.5 per cent at the meeting.

AUD/USD Technical

S3	S2	S1	R1	R2	R3
0.8800	0.8750	---	0.9080	0.9180	0.9500

During the early hours of the Asian trading session on Wednesday, the AUD/USD is consolidating after its recent surge higher up through the 0.88 level. The Australian dollar was in a free-fall for a lot of last year falling close to 20 cents. Current range: trading above 0.8800 around 0.8855.

Further levels in both directions:

• Below: 0.8800 and 0.8750.
• Above: 0.9080, 0.9180 and 0.9500.

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