7:00am (NY Time) CA Core CPI m/m Forecast 0.2% Previous 0.1%
ACTION: USD/CAD BUY -0.1% SELL 0.5%
Our tradable deviation for the Canadian Core CPI based on historical track record is 0.3%, therefore in order to trade this release successfully I’ll be looking for tradable releases of 0.5% or better to SELL USD/CAD or a -0.1% or worse to BUY USD/CAD.
Canadian Dollar has been trading very strong lately but it has found support at around the 1.0200 with the USD. If we get a worse than expected release, an obvious rebound from this level is expected and we could see the 1.0400 to 1.0500 providing some resistance; if the opposite is true, then expect 1.0200 to be taken out and USD/CAD could be on the way to parity shortly.
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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{ 5 comments… read them below or add one }
Hey Henry,
Following on from ahj question. Also with this trade the numbers didn\’t quite come out at the tradable 0.5% to sell, plus the other headline number wasn\’t as good as expected.
So with the USD/CAD having already tested a low of 1.0200 which hasn\’t been that low since July 2008, and also at the time of the figure release it was testing 1.0300.
So with all that in mind would it be safe to say with the USD being so week lately that a bit of a correction or USD strength was on the cards?
Am I right in thinking that Henry?
Cheers Devin
Devin:
You are on the right path here. As the market is close to a support area, we need to take the context of the trade into account. If you don’t take the whole market condition into consideration, it is like like a taking someone’s quote out of context and the meaning could be dramatically different. Even though I try to make the analysis for the news as clear as possible, there are instances special consideration needs to be in order.
Henry
helo, the result came out 0.2better than expected.
it should trigger the SELL trade. But how come it goes at the opposite way?
ahj:
Actually if you look at both headline and core numbers, you’ll see a conflict. I think the movement was primarily driven by USD strength, not necessarily because of the CAD CPI.
Henry
Great Work you are doing Henry !!!