Forex News Trading For CA Core CPI m/m 08/19/11

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:
7:00am CA Core CPI m/m Forecast 0.2% Previous -0.6%
ACTION: USD/CAD BUY 0.0% / SELL 0.4%

The Trade Plan
The Core CPI report will be released today and our deviation for this release, based on a historical track record, around 0.2% ~ 0.3%. Therefore, look for tradable figures of -0.2% or worse to BUY USD/CAD, or a 0.4% or better to SELL USD/CAD.

Keep in mind to look for an after-news retracement trade for this release. I´ll wait for the release, then the initial market move, and wait for a decent retracement before jumping in. For more information on my trading methods:
http://www.newsprofiteer.com/mentoring/mastermind-mentoring-system-webinar-1-of-3/

The Market
Since the last monthly release of Canada’s CPI, market has been backing off from CAD due to the ever decreasing possibility for BOC to hike interest rate, despite of BOC’s recent comments on withdrawing stimulus.  With global recovery at a stall and Canada’s own year-to-date (up to June 2011) CPI at 1.3%, it is very likely that CAD may continue to weaken on an inline release.  However, if we do get a strong release, above 0.5%, then we could see some renewed speculation of BOC rate hike, thus market may very well push USDCAD down to the 0.9700 level.

Additional Thoughts
USDCAD may stall until the equity market opens; therefore I´d recommend use patience when trading this pair during 7:00am hour. Also Core CPI rarely surprises much, so if we do not get our deviation, just stay out of the market until U.S. market opens.

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.

Thanks,

Tagged as: CAD, Canada, Canadian Dollar, Consumer Price Index, Consumption, Core CPI, CPI, Cpi Index, Estimates, Expenditures, Households, Inflation, Parity, Real Cost of Living, Resistance, Statistical Estimate, USD