On Thursday, Citi announced its decision to exit a long position in the currency pair, citing recent economic data that points to a potential risk to their initial forecast. The company had gone into trading expecting its core personal consumption expenditures (PCE) price index to be below the Federal Reserve’s expectations.
However, the latest quarterly core PCE price index reported an increase of 3.7% compared to the expected 3.4%, leading to Citi to reassess the situation.
Citi had based the transaction on the expectation that key PCE data, due to be released tomorrow, would come in lower than both Citi and the Federal Reserve forecasts, which were 2.7% annualized and 2.7% year-over-year. amounted to 8%. -year, respectively. The trade was completed with a reference spot of 0.6530 at 8:32 a.m. EST on April 25.
The move to exit the position was driven by the higher-than-expected quarterly core PCE price index, which could indicate upside risk for the upcoming core PCE data. This development was the reason Citi to take a prudent approach and terminate the transaction to avoid potential losses associated with the event risk of data disclosure.
The company reported a modest gain of 0.54% on trading, opting to safeguard these gains rather than face the uncertainty of the market’s reaction to key PCE data. The decision reflects the company’s risk management strategy in response to economic indicators that may influence market conditions.
Citis exit from the AUD/USD position emphasizes the influence of economic data on trading strategies and the importance of timely decision making in light of changing market information. The core PCE price index is an important inflation indicator and is closely monitored by the Federal Reserve when setting monetary policy.
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