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Forex Signal (Fri September 17, 2010, 8:30am NY Time EDT) - US Core CPI m/m

Discussion in 'Current Forex Trading Signals' started by Henry Liu, Sep 16, 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. Here’s the forecast for the CPI:

    8:30am (NY Time) US Core CPI m/m Forecast 0.1% Previous 0.1%
    ACTION: USD/JPY BUY 0.3% SELL -0.1%


    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 SELL USD USD/JPY. 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
    Recent trader focus on the US market has been centered around the possible announcement of QE2 (Quantitative Easing 2) as the Fed start another round of stimulus to boost the economy. The rumor was, which came from the chief economists Hatzius at Goldman Sachs on Wednesday, that the Fed may buy up to 1 Trillion in new debt as part of the QE. This has not weakened the USD in the short term, but if Bernanke confirms this rumor, we may see the market turn on the USD as it lose ground across the board.

    Therefore, this CPI release may not add much demand to the USD even if we get a very positive release. However, if we get a negative release, market will raise its speculation on the announcement of new stimulus by Bernanke next week.

    Additional Thoughts
    Since BOJ intervened yesterday, it is likely that JPY may remain weaker than USD regardless of the outcome for this release... Therefore, we should look to position our trades after this release.

    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,


    [​IMG]
     
    #1 Henry Liu, Sep 16, 2010
    Lasted edited by : Sep 8, 2016
  2. Victor Hendrix

    Victor Hendrix Recruit

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    Us CPI

    That's not accurate. US Retail Sales came out 3 days ago, on Tuesday. US CPI will be released by itself.
     
  3. Eljon G

    Eljon G Recruit

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    Victor, Henry is aware of that, see link below.

    http://www.forexpeacearmy.com/forex...0am-ny-time-edt-us-core-retail-sales-m-m.html

    I think what he meant was both the US Core CPI and Retails Sales are released at 'around' the same time, retail sales on the 2nd week and CPI on the 2nd or 3rd week.
     
  4. ayour2a

    ayour2a Recruit

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    correlation

    pls what is the correlation between USDJPY and GPBUSD/EURUSD.Thanks
     
  5. kkunlexx

    kkunlexx Private

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    nice job Henry. I look forward to that release.
     
  6. makofski

    makofski Recruit

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    no, he doesn't mean that, the trade plan is copied from last month CPI signal post when Retail Sails was scheduled at the same time/hour - it's just a Henry's mistake during copying, nothing else.

    http://www.forexpeacearmy.com/forex...-2010-8-30am-ny-time-est-us-core-cpi-m-m.html

    cheers
     
  7. Nikolay Yakov

    Nikolay Yakov Recruit

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    Currency pair selection

    Hi,

    thank you for the good articles you are posting. I have a question. How do you select the traded currency pair. Ahy you are not using GBPUSD for example, but USDJPY?

    Regards,
    Nick
     
  8. Ekponsi

    Ekponsi Private

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    Hi Henry,
    Its not been a great week for me, things going really awful, the UK retail sales went against me in a matter of minutes, while the Swiss rate decision was so hard on my position. I think you should make mention of these scenarios so we can stay out of the market. Twice of recent data has touched the CH seriously, so I think you should make mention of some of its data decisions, it will really be helpful especially as market just feeds on anything now. Thanks
     

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