Originally posted at forexfactory on July 12, 2010
Quote:Originally Posted by gummy101Hi guys,
Can anyone tell me why was there a dip in AUD/USD after the release of the Australian home loans news today even though the data was actually very positive.
Well. There are a few possible explanations.
1. The market was pricing in a much higher number than the 1.9% even the though the forecast number was 0.7%. As such when the 1.9% number came in it was at or below the expectations resulting in the down move as the market was disappointed. The report needed to be a monster report to move the aud/usd.
2. The market did like the 1.9% jump in home loans BUT, with the AUD/USD already up 300-500 pips from last week, a lot of the people already covered their shorts/and or are already long aud/usd so most of the bullish order flow that you expected was already sucked out of the market from last week. The market may just need to rest a bit before another bullish move.
3. The third and last potential explanation is that the market’s sensitivity level to that particular news was very low. This means that the market did not care about the report. Meaning that it did not generate any order flow, meaning that any movement following the release of that report was just the “noise” of the market and not related to the release of the report. You just just as easily been oblivious to the report and would have been fine.
Now which of the three categories the report falls into I will let you decide.
Come up with your own explanations if you want to as well.