On Thursday, Citi announced its decision to exit its long position in the currency pair, citing recent economic data that suggested a potential risk to their original forecast. The firm entered the deal with expectations that the core personal consumption price index (PCE) would be lower than the Federal Reserve’s forecasts.
However, the latest quarterly core PCE price index reported growth of 3.7%, compared with expectations of 3.4%, leading City reassess the situation.
Citi placed the trade based on expectations that key PCE data scheduled for release tomorrow would come in below Citi and Federal Reserve forecasts of 2.7% annualized and 2.8% annualized. -year respectively. The trade was established with a reference point of 0.6530 at 8:32 am EST on April 25th.
The decision to exit the position was prompted by a higher-than-expected quarterly core PCE price index, which could indicate upside risk in upcoming core PCE data. This development prompted City Take a cautious approach and exit the trade to avoid potential losses associated with the risk of a data release event.
The firm reported a modest 0.54% profit on the deal, opting to lock in those gains rather than face the uncertainty of the market’s reaction to the underlying PCE data. The decision reflects a firm’s risk management strategy in response to economic indicators that may affect market conditions.
City’s exit from Australian dollar/US dollar The position emphasizes the impact of economic data on trading strategies and the importance of timely decision making in the face of changing market information. The core price index PCE is a key indicator of inflation and is closely monitored by the Federal Reserve when setting monetary policy.
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