Trading The U.S. Core CPI Report, February 26, 2015

US Core CPI is expected to remain around the 0.1% and as Feds still insist that a mid-year rate hike is possible, a stronger than expected release will definitely add to that speculation. We’ll probably not see too much negative action even if the figure comes in negative, as the global market is facing a dis-inflationary theme due to crude oil prices…

8:30am (NY Time) US Core CPI m/m Forecast 0.1% Previous 0.0% DEVIATION: 0.2% (BUY USD 0.3% / SELL USD -0.1%)

The Trade Plan Our minimum tradable deviation for this release is 0.2%; if the release number (core) decreases to a minimum -0.1% then we will SELL USD; if the core release is 0.3%, we’ll BUY USD. Historically even at a difference of 0.1%, market is likely to exaggerate its move, therefore if our tradable release is hit, there is about 80% of chance market will move 50 pips within the next 90 minutes or so. Once again, we are going to focus on the Core figure, or CPI EX Food and Energy, not the headline CPI.

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: EURUSD.

Outlook Score Outlook 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 “US Core 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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