Henry Liu
Former FPA Special Consultant
- Messages
- 473
We'll be trading the Consumer Price Index (CPI) figure out of New Zealand today. CPI is Inflation, therefore it is a very high impact release. Here's the forecast:
4:45pm (NY Time) NZ CPI q/q Forecast 2.3% Previous 1.1%
ACTION: NZD/USD BUY 2.6% SELL 2.0%
The Basic Plan
Our focus will be on the headline CPI number. If we get a better release of 2.6%, we should be looking to BUY NZD/USD; if we get a lower release 2.0%, then we’ll see NZD/USD move down. Usually if our BUY or SELL figures are hit, we could expect the market to move about 40~50 pips within the next 30~90 minutes.
For information on my trading method, please read:
Henry's News Trading Method
The Market
General market sentiment is leaning towards risk appetite, with positive outlook over the European situation, market has been sending USD lower and commodities higher.
With RBNZ's current policy on hold for further tightening, if this release shows a consistent above trend inflationary pressure, there would be expectation for some shift in RBNZ's policy during the upcoming meetings.
However, it is important to realize that NZD has been benefiting from the risk appetite sentiment of late, a positive fundamental outlook such as a 2.6% or better release, market will be pushing NZDUSD up and retest recent highs in the next few weeks, in my opinion.
Additional Thoughts
RBNZ is expected to render its rate decision on January 26, and if this CPI release shows added inflationary pressure, we could see probability of a rate hike decision going up, although up to today most analysts feel that RBNZ will not hike rates until the end of 2011.
One last note: NZD is a very slow moving currency and at the time of this release we are likely to experience low liquidity. We may have to give this trade a little more time for it to develop, if we get our buy or sell figures.
DEFINITION:
“The Consumer Price Index (CPI) measures the rate of inflation (i.e., the rate of price changes) experienced by consumers when purchasing goods and services. A rising trend has a positive effect on the nation’s currency. The primary objective of the central bank is to achieve price stability; when inflation rises above an annualized rate of approximately 2%, they will respond by raising interest rates to bring prices down. Higher interest rates attract foreign investment, thus increasing demand for the nation’s currency. CPI is one of the most closely watched indicators and will usually have a high impact upon release.”
For historical data and charts of previous NZD CPI q/q:
NZD Charts and Historical Data
Thanks!
4:45pm (NY Time) NZ CPI q/q Forecast 2.3% Previous 1.1%
ACTION: NZD/USD BUY 2.6% SELL 2.0%
The Basic Plan
Our focus will be on the headline CPI number. If we get a better release of 2.6%, we should be looking to BUY NZD/USD; if we get a lower release 2.0%, then we’ll see NZD/USD move down. Usually if our BUY or SELL figures are hit, we could expect the market to move about 40~50 pips within the next 30~90 minutes.
For information on my trading method, please read:
Henry's News Trading Method
The Market
General market sentiment is leaning towards risk appetite, with positive outlook over the European situation, market has been sending USD lower and commodities higher.
With RBNZ's current policy on hold for further tightening, if this release shows a consistent above trend inflationary pressure, there would be expectation for some shift in RBNZ's policy during the upcoming meetings.
However, it is important to realize that NZD has been benefiting from the risk appetite sentiment of late, a positive fundamental outlook such as a 2.6% or better release, market will be pushing NZDUSD up and retest recent highs in the next few weeks, in my opinion.
Additional Thoughts
RBNZ is expected to render its rate decision on January 26, and if this CPI release shows added inflationary pressure, we could see probability of a rate hike decision going up, although up to today most analysts feel that RBNZ will not hike rates until the end of 2011.
One last note: NZD is a very slow moving currency and at the time of this release we are likely to experience low liquidity. We may have to give this trade a little more time for it to develop, if we get our buy or sell figures.
DEFINITION:
“The Consumer Price Index (CPI) measures the rate of inflation (i.e., the rate of price changes) experienced by consumers when purchasing goods and services. A rising trend has a positive effect on the nation’s currency. The primary objective of the central bank is to achieve price stability; when inflation rises above an annualized rate of approximately 2%, they will respond by raising interest rates to bring prices down. Higher interest rates attract foreign investment, thus increasing demand for the nation’s currency. CPI is one of the most closely watched indicators and will usually have a high impact upon release.”
For historical data and charts of previous NZD CPI q/q:
NZD Charts and Historical Data
Thanks!
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