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Forex Signal (Tue January 25 2011, 7:00am NY Time EST) - CA Core CPI m/m

Discussion in 'Current Forex Trading Signals' started by Henry Liu, Jan 24, 2011.

  1. Henry Liu

    Henry Liu Former FPA Special Consultant

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    CPI is also known as Inflation and our focus will be on the Core Inflation figure, also known as CPI excluding Food and Energy, or CPI ex Volatile Items...

    Here's the forecast:

    CA Core CPI m/m Forecast -0.2% Previous 0.0%
    ACTION: USD/CAD BUY -0.5% / SELL 0.2%

    The Trade Plan

    We will be focusing on the Core CPI release today and our deviation for this release based on historical track record is around 0.3%, therefore I’ll be looking for tradable figures of -0.5% or worse to BUY USD/CAD or a 0.2% or better to SELL USD/CAD.

    I'll be looking for a after-news retracement trade for this release. I'll wait for the release, wait for the initial market move, and wait for a decent retracement before jumping in. For more information on my trading methods:
    Henry's News Trading Method.

    The Market
    USDCAD has been remarkably resilient during the past few weeks, but we are starting to see signs of CAD weakness and general shift in market sentiment immediately after last week's BOC rate decision. Therefore, a surprise release from this CPI figure could definitely push CAD to a new level.

    My long term view on CAD still remains slightly towards bearish, despite of the current demand for Crude Oil, as we've seen time and time again that a divergence could take place especially when the upside potential for CAD is limited.

    Additional Thoughts
    USDCAD may stall until equity market open, therefore I'd recommend to use some patience when trading this pair during 7:00am hour.

    Pre-news Consideration
    There is no pre-news trading for this event.

    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”.

    Our focus is on the Core CPI, or CPI ex Energy and Food components, which provides a better picture of inflation without the seasonal factor.

    Historical Chart & Data of CA Core CPI


    Thanks,


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    #1 Henry Liu, Jan 24, 2011
    Lasted edited by : Sep 8, 2016

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