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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, Nov 17, 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”, 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 0.0%
    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
    CPI is should remain on an upward trend but the Core CPI is expected to be inline with analysts' expectation. With recent Retail Sales and NFP figures supporting a stronger economic recovery, we could also see a slight increase in inflationary pressure.

    With QE 2 already on the way, CPI will probably not change Fed's immediate policy, therefore the impact of this release should not be considered as trend changing.

    Additional Thoughts
    CPI has been on the back burner ever since most economies started monetary easing policy. However, the same reason that CPI won't change Fed's immediate policy, a sharp increase could be a strong contrast to Fed's monetary direction, and market will definitely react with strong volatility.

    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, Nov 17, 2010
    Lasted edited by : Sep 8, 2016
  2. ecafyelims

    ecafyelims Corporal

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    Henry, it looks like you forgot to change the date when you copied the last month's US Core CPI post.

    Thanks for keeping having this forum. It's a great help!
     

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