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Forex Signal (Tue December 14 2010, 4:30am NY Time EDT) - UK CPI y/y

Discussion in 'Current Forex Trading Signals' started by Henry Liu, Dec 13, 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 way 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
    Medium forecast of 29 economists surveyed by Bloomberg expect CPI y/y figure to be around 3.1%. With inflationary pressure remaining resilient, traders are now expecting more of a rate hike scenario than further quantitative easing, although BOE's official stance is that both scenarios are likely.

    Additional Thoughts
    GBP is considered neutral in my book and unless we get significant surprise in today's release, I'd still reserve my judgment until there are fundamental reasons to change my view.

    Pre-news Consideration
    I believe we should stay out of the market before the 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 For UK CPI y/y


    Thanks,


    [​IMG]
     
    #1 Henry Liu, Dec 13, 2010
    Lasted edited by : Sep 8, 2016
  2. farisjunior

    farisjunior Recruit

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    Getting the news realease at the stated time

    like u have just quoted that the news will come out at 4.3am. where the:confused::confused:n am i expected to check for it at the time of realease. this is my major problem
     
  3. Huwee

    Huwee Corporal

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    Hey FarisJunior,

    There's a number of free news services available - all of which have a bit of a delay in updating. Here's two that a lot of people use:
    • forexpeacearmy . com - go up to the menu bar at the top, hover over "Forex Calendar & Tools", then click on "Forex News Calendar"
    • forexfactory . com

    These might work for you if you follow Henry's retracement strategy (as per the recommendation in this report) because even though there's a delay in getting the news, you're waiting for a retracement anyway!

    Then there's ones you pay for which are immediate:
    • tradethenews . com (free 7-day trial available if they like the look of your LinkedIn profile!)
    • ransquawk . com (free 7-day trial available)

    Your broker may also provide a news service - double-check with them - but it might have a similar delay to the freebies above!

    Henry uses TradeTheNews

    Hope this helps!

    Huwee.
     
  4. naggie

    naggie Recruit

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    You can check at Forex Factory.

    Forex Factory
     
  5. fxtrader85

    fxtrader85 Recruit

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    Hi Henry,

    It would be interesting to know why you thought a rise in CPI would equal a stronger pound. The figure came out at a higher than expected 3.3% and in the time since then sterling has plummeted. What do you reckon?

    Cheers
     
  6. Ahmed H

    Ahmed H Private

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    first of all, it didnt hit our deviation and even if it did the effect would only last for about two hours.Besides that, there was a solid trendline on cable from 4th of december so you have to watch for these things before you jump into a trade as market usually ignores these little deviations..

    I reckon you should study some more or i will take your money.. :p
     
  7. fxtrader85

    fxtrader85 Recruit

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    Haha. Thanks for the explanation Henry, appreciate that

    :)
     

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