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Forex Signal (Tue August 17, 2010 4:30am EDT NY Time) UK CPI y/y...

Discussion in 'Current Forex Trading Signals' started by Henry Liu, Aug 16, 2010.

  1. Henry Liu

    Henry Liu Former FPA Special Consultant

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    We’ll be trading the UK Consumer Price Index (CPI) release at 4:30am NY Time today. We’ll be looking at the yearly release figure and the market could react with lots of volatitility as CPI is the basic measurement of Inflation, therefore expect to see more exaggerated moves if we get a huge surprise release. Here is the forecast:

    4:30am NY Time UK CPI y/y Forecast 3.1% Previous 3.2%
    ACTION: GBP/USD BUY 3.4% SELL 2.8%


    The Trade Plan
    We are looking for a safe deviation of 0.3% for SELL and 0.3% for BUY. If the Inflation number increases to of 3.4%, which is above BOE’s inflation target, we will BUY of GBP/USD. If the Inflation number decreases to 2.8% or less, we’ll look to SELL GBP/USD. Historically, even with a slight difference of 0.1%, market usually overreacts. If our deviation is hit, there is a strong possibility that the market will move 50 pips immediately.

    We'll be looking to trade this release using my after-news retracement method. We'll wait for the release, wait for market spike, then wait for a decent retracement before jumping in. For more information on my trading methods:
    Henry's News Trading Methods.

    The Market
    Risk aversion has strengthened on the back concerns over global economic recovery. GBP has suffered as a result of last week's BOE Inflation Report which once again painted a bleak outlook for UK's economy. BOE Gov. King stated that inflationary (or CPI) should drop to 1.5% in 2 years, and growth pretty much peaked during the 2nd quarter of 2010.

    However, BOE has been singing the same tune since the beginning of 2010, and as a matter of fact, previous BOE Inflation report stated that inflationary pressure (CPI) should drop below the 2.0% target by the end of year; instead, we're getting 3 upside surprises during the last 7 releases by 0.2% or more...

    BOE's arguments for this unsual resilience in inflationary pressure include high fuel prices and the rise in VAT from 17.5pc to 20pc., and insists that these temporary effects will be wearing off soon. As a matter of fact, BOE Inflation Report is opening doors for further easing policy by expanding its Asset Purchasing Facilities. It is likely we'll see some selling pressure on the GBP today.

    Additional Thoughts
    With BOE opening the door for further easing, there is really no upside on the short term. We're like to see further selling of GBP, even if we get a slightly better than expected CPI y/y. However, if we get a worse than expected release, this could be a catalyst for a more profound move as MPC Meeting Minutes scheduled for the next day could add to more bearish sentiment for Sterling.

    Pre-news Consideration
    I believe we could see some moderate pre-selling before the release. However, the expectation for today's release is pretty "as expected", but I'd expect more selling pressure after the release. I'd recommend to wait for at least 1.5700 before taking a SELL...

    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 For UK CPI y/y


    Thanks,


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

    PipDiva Recruit

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    Thanks Henry for your analysis - you are the best! I know that what you do seems unappreciated at times - but then the life of a trader is indeed a lonely one isn't it! Your efforts are not in vain! Keep up the good work!:):):):)
     
  3. sergenet

    sergenet Recruit

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    I agree with PipDiva. Your work is very much appreciated even though it looks like it is not. Thanks for all your help and explainations.
    Serge
     
  4. czaray

    czaray Private

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    Thanks Henry
    Your postings are really apreciated.:D
     
  5. David Gilliam

    David Gilliam Recruit

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    Gratitude

    Henry,

    I just wanted to say that out of all the people and strategies I have been following the last couple of years, yours is truly appreciated and easy to follow.
    The pips gained are always better than the pips lost and if you think about it, that's what is really all about.

    My gratitude and appreciation sir,

    questfx
     
  6. Davide

    Davide Private

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    Thank you

    Thank you Henry for all the hard work you put in these reports.
    I am glad I signed up for your mentoring program as well.
    You are a true professional.
     
  7. kellygee

    kellygee Recruit

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    Thanks

    Your effort is highly appreciated. Thanks.:);):D
     
  8. jklauss

    jklauss Private

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    Thanks for your good job Henry..you are a gem for novice traders like me.we will always support you..

    rgds
    Jay
     
  9. Mohd Amirul Nazri

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    everyone who read ur analysis would thank to u though they did not responded in the manner u hope.

    deep inside their heart (including me), wish u remain everlasting in this sincere contribution. :)
     
  10. C. Collins

    C. Collins Private

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    Mr. Henry Liu,
    I Feel that David Gilliam speaks the words that many of us feel but don't take the time to express them so here's mine....I too feel the same way..I too would like to say that out of all the people and strategies I have been following the past few years, yours is truly appreciated and easy to follow.
    The pips gained are always better than the pips lost and if you think about it, that's a good thing......I originally got into forex back in 2005 with two seperate accounts just for the interest that was paid...I had one with CMS and the other with FXCM. One charged interest the other didn't and so I was able to make money on the interest with the long accounts and was not charged interest on the short accounts..Nedless to say that didn't last too long. And so I have had some good luck and bad luck mostly bad luck UNTIL... I stumbled across your blog on the Forex Peace Army web page....Thanks to Felix Homogratus (sorry for the mispelling) and his kind and generous attitude along with yours, I;m on my way back...
    Thanks for your sincere help,
    C. Collins
     

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