US dollar strengthens on US CPI, European stocks rally, ASX futures up 7 points

Although consensus data for US consumer price inflation (CPI) came in as expected last night at 1.6% year-on-year, it seems as though the market must have priced in a softer result, and the US dollar strengthened into and after its release. Today's first chart shows the US dollar index (March CFD future in orange) rallying following the release of the figures, which was the US dollar's best sessions for about three weeks. In turn, the AUDUSD (black) sold off after hitting highs of US$0.7911 prior to the announcement. As you can see from the second chart (AUDUSD daily), although this session has ended what was an otherwise mildly bullish short-term up trend for the Aussie dollar that was playing out over the last couple of week, last night's move wasn't enough to break the buying support present around the US$0.77 level. I wouldn't be surprised to see strength return to the AUDUSD pair once again in the short term, should last night's CPI data (which was nothing surprising, although it is being reported that way by some outlets) fail to be backed up by other firm data coming from the US - tonight's GDP figures will almost certainly decide that.

While Eurozone consumer confidence remains low (but was expected) and industrial/services confidence were also lower than expected, Eurozone economic confidence seemed to be enough to rev up the bulls (who, as a Rivkin Global member rightly pointed yesterday, are primed for the prospect of quantitative easing). A depressed euro currency, no inflation worries to stop aggressive stimulus and sustained low oil prices, Europe is probably in a position now to begin its long recovery effort. Investors seem convinced that the Greeks are going to play ball with the other Eurozone ministers and therefore any event risks tied to that have dissipated. Today's last chart shows the performance of Germany's DAX index (orange) versus the EURUSD currency pair since mid October last year. Traders please take note that US GDP will print at 12:30am tomorrow morning, Sydney time.

In Australia, ASX futures are 7 points higher and we have Harvey Norman (HVN), Woolworths (WOW) and Treasury Wine Estates (TWE) reporting today among many others, which Shannon Rivkin will be commenting on this afternoon at 2pm Sydney time on Sky Business. 

ASX 300 companies reporting earnings today:
  • GRR Grange Resources
  • HVN Harvey Norman
  • HZN Horizon Oil
  • LSA Lachlan Star
  • MML Medusa Mining
  • MTR Mantra Group
  • NST Northern Star Resources
  • SFX Sheffield Resources
  • SIR Sirius Resources
  • SLR Silver Lake Resources
  • TAP Tap Oil
  • TWE Treasury Wine Estates
  • VET Vocation
  • VGL Vista Group International
  • WOW Woolworths

Today‚Äôs charts are taken from the Rivkin Trader platform. 30,000 global instruments available to trade including FX, commodities, index, ETFs and international shares. Trade Australian share CFDs from just $8 or 0.10%. Click here or phone 1300 748 546 to get your free $100,000 demo account.

Upcoming economic announcements: Japanese CPI at 10:30am, German CPI at 12am, US GDP at 12:30am, all Sydney time.

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