Dec 032012

6A 12 12 (1 Min) 12.03.12

12/3/2012 RBA Rate Statement / Cash Rate (1730 HI time / 2230 EST)
Forecast: 3.00%
Actual: 3.00%
Started @ 1.0415
1st Peak @ 1.0439 – 1731 (1 min)
24 ticks

Reversal to 1.0398 – 1731 (1 min)
-41 ticks

2nd Peak @ 1.0448 – 1732 (2 min)
33 ticks

Reversal to 1.0424 – 1851 (81 min)
24 ticks

Notes: With continued economic growth softening in Australia and abroad, and risks to the global outlook , expectations were strong for the RBA to cut interest rates by another 25 BP. This time they gave in to the pressure and carried through with the cut. This caused an indecisive scenario as the market rallied for 24 ticks, then fell 41 ticks in the span of 2 sec. After hovering in the short area for the latter part of the :31 bar, it rallied for a 2nd peak of 33 ticks, then sustained the long reaction. With JOBB, you would have filled long and then the reversal would have filled short to close you out with about a 29 tick loss with slippage. This would have happened before the OCO could function, but the safety logic would have triggered preventing any further entries from stop losses. The reaction is surprising, since normally a rate cut would trigger a weakening of the currency and cause a decisive short reaction. The rate cut must have been priced in and already expected. After the 2nd peak, it reversed for 24 ticks 80 min later.