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Forex Signal (Wed June 15 2011, 8:30am NY Time EST) - US Core CPI m/m

Discussion in 'Current Forex Trading Signals' started by Henry Liu, Jun 14, 2011.

  1. Henry Liu

    Henry Liu Former FPA Special Consultant

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    We’ll be trading US Core CPI m/m release tomorrow. 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 0.2% Previous 0.2%
    ACTION: 0.4% BUY USDJPY / 0.0% BUY EURUSD

    The Trade Plan

    Our minimum tradable deviation for this release is 0.2%; if the release number (core) increases to a minimum 0.4% then we will BUY USD/JPY. If the CPI number decreases to 0.0% or less, we’ll BUY EUR/USD. 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.

    For more information on my trading methods:
    Henry Liu's Trading Method


    The Market
    With Tuesday's PPI surprising the market at 0.2% (0.1% estimated) and Core Retail Sales slightly higher at 0.3% for the same month, Core CPI release will probably show that inflationary pressure for US in the month of May remained consistent with trend.

    Considering that the headline Retail Sales surprised the market to the upside (-0.2% versus -0.5%), it is possible that the drop in average gas prices at the pump didn't take effect until the end of the month, and as a result the headline inflation should stay inline with expectation or slightly higher in my opinion.

    Additional Thoughts
    With FOMC focusing on Job/Economy more than Inflation, unless we get a huge surprise, market may very well ignore this release and fall back to the market trend prior to the release.

    Pre-News 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 Chart and Data for US Core CPI m/m




    Thanks,


    [​IMG]
     
    #1 Henry Liu, Jun 14, 2011
    Lasted edited by : Sep 8, 2016

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