Henry Liu
Former FPA Special Consultant
- Messages
- 473
We’ll be trading US Core CPI m/m release today. CPI or Consumer Price Index, also known as the “true cost of living”, is what drives Central Banks to raise/cut interest rate, therefore this release will be widely watched. Here’s the forecast for the CPI:
8:30am (NY Time) US Core CPI m/m Forecast 0.1% Previous 0.1%
ACTION: USD/JPY BUY 0.3% SELL -0.1%
The Trade Plan
Our minimum tradable deviation for this release is 0.2%; if the release number (core) increases to a minimum 0.3% then we will BUY USD/JPY. If the CPI number decreases to -0.1% or less, we’ll SELL USD USD/JPY. Historically even at a difference of 0.1%, market is likely to exaggerate its move, therefore if either of our tradable releases is hit, there is about 80% of chance market will move 50 pips within the next 90 minutes or so.
We'll be trading this release using our after news retracement trade method. Since both CPI and Retail sales are scheduled at the same time, waiting for retracement is not only the logical thing to do, but also the safe thing to do.
For more information on my trading methods:
Henry's news trading methods.
The Market
Recent trader focus on the US market has been centered around the possible announcement of QE2 (Quantitative Easing 2) as the Fed start another round of stimulus to boost the economy. The rumor was, which came from the chief economists Hatzius at Goldman Sachs on Wednesday, that the Fed may buy up to 1 Trillion in new debt as part of the QE. This has not weakened the USD in the short term, but if Bernanke confirms this rumor, we may see the market turn on the USD as it lose ground across the board.
Therefore, this CPI release may not add much demand to the USD even if we get a very positive release. However, if we get a negative release, market will raise its speculation on the announcement of new stimulus by Bernanke next week.
Additional Thoughts
Since BOJ intervened yesterday, it is likely that JPY may remain weaker than USD regardless of the outcome for this release... Therefore, we should look to position our trades after this release.
PreNews Consideration
There is no pre-news bias for this release.
DEFINITION:
“CPI, Consumer Price Index, is a statistical estimate of the movement of the prices of goods and services bought for consumption purposes by households. Its computation uses price data collected for a sample of goods and services from a sample of sales outlets in a sample of locations for a sample of times and estimates of the shares of the different expenditures in the total covered by the index which are usually based upon expenditure data obtained for sampled periods from a sample of households wikipedia).” It is also known as the “True Cost of Living”.
Historical Data & Chart Of US Core CPI.
Thanks,
8:30am (NY Time) US Core CPI m/m Forecast 0.1% Previous 0.1%
ACTION: USD/JPY BUY 0.3% SELL -0.1%
The Trade Plan
Our minimum tradable deviation for this release is 0.2%; if the release number (core) increases to a minimum 0.3% then we will BUY USD/JPY. If the CPI number decreases to -0.1% or less, we’ll SELL USD USD/JPY. Historically even at a difference of 0.1%, market is likely to exaggerate its move, therefore if either of our tradable releases is hit, there is about 80% of chance market will move 50 pips within the next 90 minutes or so.
We'll be trading this release using our after news retracement trade method. Since both CPI and Retail sales are scheduled at the same time, waiting for retracement is not only the logical thing to do, but also the safe thing to do.
For more information on my trading methods:
Henry's news trading methods.
The Market
Recent trader focus on the US market has been centered around the possible announcement of QE2 (Quantitative Easing 2) as the Fed start another round of stimulus to boost the economy. The rumor was, which came from the chief economists Hatzius at Goldman Sachs on Wednesday, that the Fed may buy up to 1 Trillion in new debt as part of the QE. This has not weakened the USD in the short term, but if Bernanke confirms this rumor, we may see the market turn on the USD as it lose ground across the board.
Therefore, this CPI release may not add much demand to the USD even if we get a very positive release. However, if we get a negative release, market will raise its speculation on the announcement of new stimulus by Bernanke next week.
Additional Thoughts
Since BOJ intervened yesterday, it is likely that JPY may remain weaker than USD regardless of the outcome for this release... Therefore, we should look to position our trades after this release.
PreNews Consideration
There is no pre-news bias for this release.
DEFINITION:
“CPI, Consumer Price Index, is a statistical estimate of the movement of the prices of goods and services bought for consumption purposes by households. Its computation uses price data collected for a sample of goods and services from a sample of sales outlets in a sample of locations for a sample of times and estimates of the shares of the different expenditures in the total covered by the index which are usually based upon expenditure data obtained for sampled periods from a sample of households wikipedia).” It is also known as the “True Cost of Living”.
Historical Data & Chart Of US Core CPI.
Thanks,
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