Forex Trading Signals by Magister Pips, 2012/01/20
0700 CAD Core CPI m/m (-0.2% expected, +0.1% prior, -0.4% to +0.2% range)
Affliated Reports:
CAD Core CPI y/y (+2.2% expected, +2.1% prior, +2.0% to +2.5% range)
CAD CPI m/m (-0.2% expected, +0.1% prior, -0.2% to +0.2% range)
CAD CPI y/y (+2.2% expected, +2.1% prior, +2.0% to +2.5% range)
Last month was flat except for Core YoY whichh was -0.1 and the USDCAD just wiggled a bit. In
November 2011 a +0.2 deviation higher on Core m/m and +0.1 on Headline m/m came with +0.2 on both of
the y/y figures. This lead to CAD strength and the USDCAD about 40 pips over the next 20 minutes in
a fairly stead stream, there was not much initial spike however the pair did sell off about 25 pips
in the 3-4 minutes leading into the release, suggesting some sort of leak or rumor. This would not
be the first time news from Canada has been leaked, it does happen. The month before in October a
+0.3 deviation on the Core m/m came out with the other 3 CPI numbers mostly flat or with slightly
higher deviations. Initially just a 15 pip dip, however about 10 minutes after the release the
Canadian Dollar did strengthen some 40 pips over the next 20 minutes. After about 90 minutes a 20
pip bounce lead to a period of chop until a further break lower in USDCAD and thus continuing this
CAD strength. A +/-0.3 is more tradable with fast execution and slippage control, but +/-0.4 is the
safest option if there you ever get slippage on your broker, also considering liquidity is lower due
to Christmas. For example, in Nov 2010 a 0.3 reversed after spiking down just 25 pips, so this shows
what is possible, contrasted to June's move on a +0.3 dev where a 40 pip down-spike consolidated at
the lows and then broke these lows for a further 30 pip run.
If it comes out at +0.2% or higher, USD/CAD should drop about 25-45 pips.
If it comes out at -0.6% or lower, USD/CAD should rally about 25-45 pips.
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