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”, it 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: 0.3% BUY USDJPY / -0.1% BUY EURUSD
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 BUY EURUSD. 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
CPI is expected to remain steady and at a slow pace of increase. Market is currently focusing on issues with economic recovery and employment, which leaves inflation on the backburner. It the highly unlikely chance US Core CPI were to surprise to the upside, market would probably react to it for the very short-term, or about 2 hours.
If we do get a surprise on the inflation front, with recent encouraging growth in the housing market, improvement in the unemployment rate, and record high PMIs, market could speculate that the Federal Reserve may be addressing inflation issue sooner than later and leads to hike rates ahead of schedule.
Additional Thoughts
The best time to trade this release would probably be during the NY Equity market open at 9:30am as this release is not a strong market mover... unless we get a strong Retail Sales, it's probably best to stay out then.
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: 0.3% BUY USDJPY / -0.1% BUY EURUSD
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 BUY EURUSD. 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
CPI is expected to remain steady and at a slow pace of increase. Market is currently focusing on issues with economic recovery and employment, which leaves inflation on the backburner. It the highly unlikely chance US Core CPI were to surprise to the upside, market would probably react to it for the very short-term, or about 2 hours.
If we do get a surprise on the inflation front, with recent encouraging growth in the housing market, improvement in the unemployment rate, and record high PMIs, market could speculate that the Federal Reserve may be addressing inflation issue sooner than later and leads to hike rates ahead of schedule.
Additional Thoughts
The best time to trade this release would probably be during the NY Equity market open at 9:30am as this release is not a strong market mover... unless we get a strong Retail Sales, it's probably best to stay out then.
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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