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FX BOOTCAMP’s Posts – ForexStreet.net


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FX BOOTCAMP’s Posts – ForexStreet.net

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FX BOOTCAMP’s Posts – ForexStreet.net

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FX BOOTCAMP’s Posts – ForexStreet.net

The prior four ADP releases have had no lasting impact on the price of the EUR/USD or EUR/JPY currency pairs. During the 15 to 30 minutes following those news events, the euro was virtually unchanged, while the euro yen was usually confined to a 20-pip trading range. The last viable post-ADP scalp trade was a EUR/JPY long after the release of the November report.

Although responses to most recent US economic reports have been rather muted, some significant moves have materialized following notably strong or weak US figures. The euro rose sharply following the February US CPI report, as discussed in this post. A solid ISM manufacturing PMI report released Tuesday sparked a US dollar rally which dragged the EUR/USD lower by nearly 70 pips in 30 minutes.

Join me in the FX Bootcamp News Room as we cover the ADP news. I will start coverage fifteen minutes before the release of the report.

Curt Wehrley
Twitter: @fxcoachcurt
Currency Coach & Quantitative Analyst
FX Bootcamp

FX BOOTCAMP’s Posts – ForexStreet.net

Of the 29 economists surveyed recently by Bloomberg News, two have predicted a 50bp rate cut, while the other 27 see the central bank reducing its cash rate target by 0.25 percent. Odds of a rate cut rose materially following the 3 April statement by Governor Glenn Stevens, who implied that a shift toward more accommodative policy would hinge on the March CPI report:

The Board’s view…were demand conditions to weaken materially, the inflation outlook would provide scope for easier monetary policy. At [the 3 April] meeting, the Board…thought it prudent to see forthcoming key data on prices to reassess its outlook for inflation, before considering a further step to ease monetary policy.

Australian data released 24 April showed that the change in underlying inflation over the year ended March 2012 slowed to its lowest level since 1999.

Ongoing weakness in the demand picture was highlighted by results of a survey of the country’s 100 largest dwelling builders released on Monday. The HIA – JELD-WEN report showed that seasonally adjusted new home sales declined sharply in March to the lowest level in more than a decade. The Housing Industry Association’s Chief Economist has called for the RBA to “act boldly [on 1 May] and cut the official cash rate by 50 basis points.”

As I mentioned in this post, a surprise move by the bank’s Board is rare. Over the prior 25 RBA meetings, the consensus forecast has failed to matched the RBA’s announced cash rate target on just four occasions. The debt markets have certainly priced in a rate cut: Australia’s 10-year government bond yield closed out the month of April just four basis points above its record low established last Friday.

The reaction by the so-called Aussie should depend on the combination of the RBA’s move on interest rates and Stevens’ policy statement. A “one-and-done” strategy, where the RBA cuts by 25bp and describes a wait-and-see approach in the statement, could actually give the Australian dollar a lift. Given the demand and inflation picture in Australia, it’s reasonable to conclude that there is a non-trivial chance of a 50bp rate cut.

Join me in the FX Bootcamp News Room as we cover the release of the RBA policy decision and statement. I will discuss ways in which traders might trade this report starting 15 minutes before the news, due out at 12:30am New York time (04:30 GMT).

Related posts:
Preview of 6 March RBA Rate Decision & Policy Statement

Preview of 3 April RBA Rate Decision & Policy Statement

Preview of 24 April CPI report

Curt Wehrley
Twitter: @fxcoachcurt

Currency Coach & Quantitative Analyst

FX Bootcamp

FX BOOTCAMP’s Posts – ForexStreet.net