NEWS / Foreign Exchange

The CPI data has created an opportunity to buy Australian dollars at good levels

As we thought might be the case, the Australian CPI data was more moderate than market expectations, and we have that immediate sell off.

The message I have been trying to get out for sometime now is that the Australian dollar does not need another rate hike to continue to rally. The Australian dollar will continue to climb in the medium and long term due to already high rates by international standards, the continuing strong growth in China and Asia and subsequent commodity demand, and all this overlaying a weakening US dollar.

Australian exporters in particular should take advantage of current levels.

I expect support at .8225 to contain the fall for resumption of the major up-trend.

Given the extent of the move an AUD TACTICAL UPDATE follows below. We do not normally do this but thought it appropriate on this occasion.

AUD/USD   .8255      +336 pts

Buy 2 units on stop .8289, stop loss .8241

Buy 2 units on stop .8309, stop loss .8261

Short 2 units .8271, stop loss .8279