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27 Apr 2016
AUD/JPY on free-fall post awful Aus CPI read
AUD/JPY has been hammered over 100 pips from highs to lows, last at 85.25, following a very unexpected big miss in Australia's inflation numbers, leading to immediate speculation that the RBA may now be forced to cut interest rates in the foreseeable future given the worsened outlook in prices.
Australian inflation just awful during Q1
Australia RBA trimmed mean CPI (QoQ), which happens to be the favourite gauge for the Central Bank to make its judgement on inflationary pressures, came at 0.2% vs +0.5% and +0.6% last. Meanwhile, Australia RBA trimmed mean CPI (YoY) stood at 1.7% vs 2% exp and 2.1 last. As per Australia CPI (QoQ), it came in at -0.2% vs 0.2% exp and +0.4% last, while CPI (YoY) came at 1.3% vs 1.7% exp and 1.7% last.
AUD/JPY key levels for today
Immediate level of support, which looks very fragile at present, is found at 85.25 (swing low April 26th), followed by big round number 85.00, ahead of 84.85 (daily S2 and ATR 14 limit) Below the latter ,84.50 comes into focus. On the upside, 85.50 becomes the first area of significant resistance ahead of 86.00. Given the sharp decline and the build up of RBA rate cuts expectations, any pullbacks is probably going to be perceived, should other conditions agree, as a selling opportunity today. That said, playing Yen longs warrants caution ahead and right after an important policy decision by the BOJ tomorrow; expectations are for more aggressive easing measures, via further rate cuts and even expending its current QQE program, so that the Yen can adjust lower.
Australian inflation just awful during Q1
Australia RBA trimmed mean CPI (QoQ), which happens to be the favourite gauge for the Central Bank to make its judgement on inflationary pressures, came at 0.2% vs +0.5% and +0.6% last. Meanwhile, Australia RBA trimmed mean CPI (YoY) stood at 1.7% vs 2% exp and 2.1 last. As per Australia CPI (QoQ), it came in at -0.2% vs 0.2% exp and +0.4% last, while CPI (YoY) came at 1.3% vs 1.7% exp and 1.7% last.
AUD/JPY key levels for today
Immediate level of support, which looks very fragile at present, is found at 85.25 (swing low April 26th), followed by big round number 85.00, ahead of 84.85 (daily S2 and ATR 14 limit) Below the latter ,84.50 comes into focus. On the upside, 85.50 becomes the first area of significant resistance ahead of 86.00. Given the sharp decline and the build up of RBA rate cuts expectations, any pullbacks is probably going to be perceived, should other conditions agree, as a selling opportunity today. That said, playing Yen longs warrants caution ahead and right after an important policy decision by the BOJ tomorrow; expectations are for more aggressive easing measures, via further rate cuts and even expending its current QQE program, so that the Yen can adjust lower.