Wednesday morning we had the new Australian (Q/Q) CPI released. It was expected to be up 0.4% but fell short, only 0.2%. This may set the stage for another reduction in the Australia bank rate when the Reserve Bank meets on February the 5th. Currently, the rate is 3%, the highest in the developed world.
We note the open interest in the futures market is large and still growing, up 10,457 contracts. As we observed in the latest COT report, the speculative long in the Aussie Dollar was 113.6K, so the increase in the OI means the specs are still buying. And, despite the buying, the A$ is going sideways; this acts like a tired bull market. Remember, markets that cannot go up, go down, and the move is exacerbated when there is an abundance of stale longs. We will be looking for a spot to establish a short position.
[I]Any opinions, news, research, analyses, prices, or other information contained in this post are provided as general market commentary, and do not constitute investment advice from CashBackForex and/or CashBackForexUSA[/I]