Australian inflation data came in higher than expected at an annualized rate of 3.8%, and will force the RBA to maintain a more hawkish monetary policy.
- Australian inflation (CPI) data was released a few hours ago. The data showed higher than expected inflation, running at a new annualised rate of 3.8%, exceeding the widely anticipated rate of only 3.6%, just a tick higher than the previous month's rate of 3.5%. This will put more pressure on the Reserve Bank of Australia to maintain a more hawkish policy, and effectively pushes rate cuts further away. This has helped boost the value of the Australian Dollar, which is one of the best-performing currencies so far today since the Asian open. Forex day traders might be wise to look to trade the AUD and the NZD long today.
- The Reserve Bank of New Zealand cut its interest rate from 2.25% to 2.00% as was widely expected. More significantly, the Bank signaled that its current easing cycle of rate cuts has ended as the economy is beginning to show sufficient signs of recovery. This more hawkish meontary outlook has made the Kiwi the biggest gained of the day, with the New Zealand Dollar firmly higher against all major currencies.
- In the Forex market, the strongest major currency since the Tokyo open is the New Zealand Dollar, with the weakest major currency being the Japanese Yen, putting the NZD/JPY currency cross in focus. It is clearly a risk-on environment in the market now. The USD/JPY currency pair is again trading above ¥156.00. Trend traders will still be long of this currency pair, although they will remain vulnerable over the short-term to potential intervention from the Bank of Japan or Japanese Government which does not want to see the Yen depreciate much further. The US Dollar is declining against its long-term bullish trend as sentiment continues to rise in favour of a December rate hike by the Fed: an 83% probability now according to the CME FedWatch tool.
- Yesterday saw the release of poorer than expected US retail sales and consumer confidence data, suggesting the US economy is cooling down. However, this has not prevented the US Dollar falling or the US stock market rising, so markets seem to be shrugging off bad data, which is a bullish sign. The S&P 500 Index rose by almost 1% yesterday, and in premarket trading today is priced just below 6,800, not very far from the record high above 6,900.
- Bitcoin is still held at the ressitance level of $88,487 - a sustained break above this level would be a bullish sign. Bitcoin has made a bullish recovery in recent days, perhaps giving hope to long-term investors that now is a good place to buy.
- There are two high-impact economic data releases scheduled for today:
- UK Autumn Forecast (the annual budget)
- US Unemployment Claims
- This might make it is a good idea to keep an eye on the GBP/USD currency pair today
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