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 in the release. Here is the forecast for this release:
4:30am NY Time UK CPI y/y Forecast 3.5% Previous 3.7%
ACTION: GBP/USD BUY 3.8% SELL 3.2%
We are looking for a deviation of 0.3%. If the Inflation number increases to of 3.8%, which above BOE’s inflation target, we will BUY of GBP/USD. If the Inflation number decreases to 3.2% or less, we’ll look to SELL GBP/USD. Historically, even with a slight difference of 0.1%, market usually overreact. If our deviation is hit, there is a strong possibility that the market will move 50 pips immediately.
With UK’s administration planning for a round of stringent budget and spending cuts while counting on inflationary pressure to level off at the second half of the year, a strong CPI release may put the economy in a bind as there are no expectations for a rate hike until maybe in 2011. Therefore, even though in principle we should be looking to buy GBP on a better release, the long-term impact of such a release may be negative for the economy.
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”.
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- Trading Canada Core CPI 04/23/10…
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{ 2 comments… read them below or add one }
Henry,
As you have noted, people are adding questions off of other forums to get further ahead in points. I have a few suggestions to keep the forum as it was intended, and to keep people from searching the internet for different wording of similar questions
1. If you ask a question, you MUST provide a rating for best answer. This will keep those from cutting and pasting 1000′s of question busy back tracking.
2. You must answer 50% of the # of questions you ask or you will be eliminated from the contest regardless of how many points you have.
3. Answering Questions take more time, thought, and experience. Answering should be worth 10 points vice 5 points.
As you’ll note, most people are not rating because they are not forced to. You may want to consider rules 1 & 2 mentioned above to keep the quality of the forum up.
As in my case, I have studied under several mentors, traded for many years, and take time to give thorough answers…yet the individual asking never looks back to the questions. To force them to rate an answer to their questions will slow down the cut & paste internet searching for FOREX FAQ’s.
Also,
Thank you,
Tyce Shelburn
Tyce:
You suggestion sounds very good. I will talk to my moderators and get them to incorporate into the contest. Thank you.
Henry