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Forex Signal (Fri January 14 2011, 8:30am NY Time EST) - US Core CPI

Discussion in 'Current Forex Trading Signals' started by Henry Liu, Jan 13, 2011.

  1. Henry Liu

    Henry Liu Former FPA Special Consultant

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    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.

    Therefore, it is logical to expect market to focus on the Core Retail Sales, which is released at the same time of the CPI figure; please read my post on Retail Sales.

    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. There might be for the Retail Sales. Please read my analysis on that.

    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,


    [​IMG]
     
    #1 Henry Liu, Jan 13, 2011
    Lasted edited by : Sep 8, 2016
  2. tantric

    tantric Recruit

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    Hi Henry,thank you for your job.Greetings
     
  3. forexSQ

    forexSQ Recruit

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    good analysis , do you have any site or blog
     
  4. sutemali

    sutemali Recruit

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  5. nazmien_ahmad

    nazmien_ahmad Recruit

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    TQ friend,good analysis
     

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