We’ll be trading the Consumer Price Index (CPI) figure out of New Zealand today. CPI is Inflation, therefore it is a very high impact release. Here’s the forecast:
6:45pm (NY Time) NZ CPI q/q Forecast 0.5% Previous 0.4%
ACTION: NZD/USD BUY 0.8% SELL 0.2%
Our focus will be on the headline CPI number. If we get a better release of 0.8%, we should be looking to BUY NZD/USD; if we get a lower release 0.2%, then we’ll see NZD/USD move down. Usually if our BUY or SELL figures are hit, we could expect the market to move about 40~50 pips within the next 30~90 minutes.
General market sentiment is leaning towards risk appetite, with earning report season kicking off with Alcoa yesterday and Intel today, it’s no wonder why during the U.S. trading session currency market recovered despite of today’s worse than expected Retail Sales figure. With Kiwi breaking the resistance level set in June, now hovering around the 0.7200 level against USD, we could see further strength in the NZD if we get a stronger CPI release, adding to expectation for RBNZ Bollard’s already bullish stance on its rate policy.
Since RBNZ is expected to render its rate decision on July 28, and if this CPI release shows added inflationary pressure, we could see probability of a rate hike decision going up from the current 68% (as predicted by Credit Suisse). This would surely add more fuel for NZD to move upwards against USD and AUD.
One last note: NZD is a very slow moving currency and at the time of this release we are likely to experience low liquidity. We may have to give this trade a little more time for it to develop, if we get our buy or sell figures.
DEFINITION:
“The Consumer Price Index (CPI) measures the rate of inflation (i.e., the rate of price changes) experienced by consumers when purchasing goods and services. A rising trend has a positive effect on the nation’s currency. The primary objective of the central bank is to achieve price stability; when inflation rises above an annualized rate of approximately 2%, they will respond by raising interest rates to bring prices down. Higher interest rates attract foreign investment, thus increasing demand for the nation’s currency. CPI is one of the most closely watched indicators and will usually have a high impact upon release.”
Here’s one of my previous videos on NZ CPI q/q. I hope this video will help you understand this release better.
[flv:http://www.newsprofiteer.com/101409-nzdcpi/101409-nzdcpi.mp4 480 360]
Related posts:
- New Zealand CPI q/q 10/14/09
- Forex Trade Plan And Video For RBA Cash Rate Decision 08/03/10
- Forex Plan and Video on CA CPI m/m 07/23/10
- ECB Minimum Bid Rate Decision (Interest rate decision) 12/03/09
- Canadian Core CPI Trading Plan 05/21/10
- Forex Trading Plan For Canada Core CPI m/m 06/22/10
- Forex News Trading Plan For CA Core CPI m/m 01/25/11
- Forex Trade Plan For Canada Core CPI m/m 09/21/10
- RBA Cash Rate Decision Trading Plan 07/06/10
- Forex Trade Plan For CA Core CPI m/m 08/20/10
{ 2 comments… read them below or add one }
I went short on NZDUSD at the release of the news at 0.7239 with TP at 0.7188. Turned on my PC today and saw a 50pip profit. Thank you Henry, keep it coming, ure the man!
As always! great work Henry please keep us posted