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Forex Signal (Fri October 15 2010, 8:30am NY Time EDT) - US Core CPI m/m

Discussion in 'Current Forex Trading Signals' started by Henry Liu, Oct 15, 2010.

  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”, is what drives Central Banks to raise/cut interest rate, therefore this release will be widely watched. At the same time, we also have the US Core Retail Sales, which is another strong high impact release that could change the short term market trend; therefore please also read my analysis on that release... Here’s the forecast for the CPI:

    8:30am (NY Time) US Core CPI m/m Forecast 0.1% Previous 0.0%
    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
    Tuesday's FOMC Minutes brought on another round of USD weakness, but judging from today's market price action, we could be looking at a decent support level for the short-term as most major pairs have retraced significantly from the recent highs against USD.

    As far as the CPI is concerned, most market analysts are expecting inline with forecast release; however, a surprise uptick in the CPI could diminish expectations for further QE measures from the Feds, therefore boost USD up significantly.

    Additional Thoughts
    With Retail Sales coming out at the same time, I'd be paying more attention the the Retail Sales release as it is a more tradable release.

    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,


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    #1 Henry Liu, Oct 15, 2010
    Lasted edited by : Sep 8, 2016

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