Trading The CA Core CPI Release, May 22, 2015

CA Core CPI is likely a strong high-impact event as recent BOC’s next policy direction could depend on this release. With Crude Oil prices continue to remain subdued, today’s CPI and Retail Sales out of Canada should provide plenty of reason for market to act…

Here´s the forecast:

8:30am CA Core CPI m/m Forecast 0.1% Previous 0.6% DEVIATION: 0.3% (BUY CAD 0.4% / SELL CAD -0.2%)

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

I’d recommend to use the Recommended Pairs from above as they are based on my CSM, which should provide the best combination of currency pairs to trade based on better/worse news… of course, you can also trade the default pair: USDCAD.

Outlook ScoreOutlook score is derived from market sentiment, focus, and economic indicators for the currency. It represents the long-term trend of the currency and its market perception. In short, a strong Outlook Score means more long-term demand for the currency, and a weak Outlook Score is the opposite.

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.

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