Australian Dollar Seeks Modest Gains Following Expected Inflation Report

By Eric Andersen,

THE TAKEAWAY : Aussie Consumer Inflation Expectation rose to 3.3% from 2.7% > Market Risk Aversion in the Face of Slowing Chinese Growth Poor for Aussie Dollar > AUDUSD Enjoyed Small Gains

Data released by the Melbourne Institute of Applied Economic and Social Research showed that Australian inflation expectations rose this month. The country’s consumers expected price levels to rise to 3.3 percent for the month of April, up from 2.7 percent during March.

The Australian Dollar has been trading sideways this month in the face of a poor risk-trend outlook working against the currency . Recent negative growth estimates in China have tempered appetites for the vulnerable currency . China is Australia’s largest consumer of mining and construction exports, and slower Chinese economic growth, data of which is due Friday morning , equates to a decline in demand for Aussie goods. Contracting demand for Australian exports would hurt to country’s manufacturing and mining sectors, and the Australian dollar would suffer as a result.

Though the release bodes well for future Aussie economic growth, traders appeared to be waiting on other reports, due out later in the day, that are more indicative of the market’s risk-on/risk-off attitude. Both Australian employment and Chinese GDP data are due within the next 36 hours. In the minutes following the report’s release, AUDUSD rose from 1.0306 to highs of 1.0312.
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Original Article: http://www.dailyfx.com/forex/market_alert/2012/04/12/Australian_Dollar_Seeks_Modest_Gains_Following_Expected_Inflation_Report.html

DailyFX is the forex news and research arm of FXCM (NYSE: FXCM), which provides currency trading and brokerage services and is an advertiser on TheStreet websites. Any opinions, news, research, analyses, prices, or other information is provided as general market commentary, and does not constitute investment advice. Dailyfx will not accept liability for any loss or damage, including without limitation to, any loss of profit, which may arise directly or indirectly from use of or reliance on such information. Currency trading involves significant risk of loss. Individual authors may hold positions in the currencies discussed in the article.