Call me old fashioned, but trading around economic indicators is the best. They don’t come along often in Asia-Pacific trading but Australian Q4 CPI is a one that could cause a 50-pip gap.

The numbers are at the bottom of the hour. Expectations:

  • Headline CPI +0.2% q/q; +3.3% y/y
  • Trimmed mean +0.5% q/q; +2.4% y/y
  • Economist estimates on the trimmed mean range from 2.1% to 2.6%.

I suspect the market is priced for something a lower than that after soft PPI figures and New Zealand CPI. I would much rather be short AUD here than long but with ecodata it’s always a roll of the dice.

The OIS market is priced for a 76% chance of a 25 bps cut on Feb 7. And a 60% chance of another 25bps on March 7.

McCrann has a bit more colour.