US Dollar and Public Holidays

Submitted by Craig Strzelecki on 17 January, 2006 - 08:16

The US Dollar didn't seem to move much during the public holiday but it did have a large trading range... At 7am (AEDT), the local unit was trading at US75.47¢, which is the same as last nights' close of US75.47¢. In overnight trade, it hit a low of US75.31¢ and a high of US75.78¢. So basically the AUD dollar has been in a trading range of 20 pips above and below...

Looks like the chart is travelling sideways for the moment... Remember it's Martin Luther King Jr. Day in the USA last night so that was a contributing factor.

Two pieces of data that may affect the AUD/USD movements over this week.

On Tuesday, the Australian Bureau of Statistics releases its November housing finance data, which follows last October's rise of 1.1 per cent.

"Housing is not the hot topic it was when it was booming and putting pressure on the Reserve Bank so the housing finance numbers tend to pass the market by without too much comment," ICAP head of economics and strategy Michael Thomas said.

More importantly the US December consumer price index is released this Wednesday. Something to watch for as its influence is such that if the USD gets into a trend the AUD/USD trading pair will follow that trend.

What is the CPI?
Consumer Price Index (CPI) - The Consumer Price Index (CPI) is a measure of the average price level paid by urban consumers (80% of population) for a fixed basket of goods and services. It reports price changes in over 200 categories. The CPI also includes various user fees and taxes directly associated with the prices of specific goods and services.

The influence of the data on forex prices depends... if the data is in line with market expectations then the effect isn't substantial. But if it isn't in line with market expectations the influence of the CPI data may strengthen or weaken the USD standing. So for example - in the past, a CPI figure that was higher than market expectations may send the USD into lower territory due to the higher inflation figures.

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