Forex Trading Signals by Magister Pips, 2012/02/17
0700 CAD Core CPI m/m (+0.1% expected, -0.5% prior, -0.2% to +0.2% range)
Affliated Reports:
CAD Core CPI y/y (+1.9% expected, +1.9% prior, +1.7% to +2.1% range)
CAD CPI m/m (+0.3% expected, -0.6% prior, -0.1% to +0.5% range)
CAD CPI y/y (+2.3% expected, +2.3% prior, +2.0% to +2.6% range)
Last months -0.3 on Core MoM came with a -0.4 on the Headline MoM, Core YoY was -0.3 and Headline YoY
was -0.4. This lead to a 20-30 pip spike, not much considering what this deviation has done in the
past in a normal environment. CPI figures don't work so well in this type of environment with ultra
low interest rates anyhow due to all the negative sentiment due to the ongoing Debt crisis. The USDCAD
had rallied from 1.0070 to 1.0150 ahead of the release, so it was already up quite a bit when this
figure came out. It did then pullback from the London open until the release but only 20-30 pips.
In November and October 2011 there was smaller deviations than this and only small spikes however the
moves did continue over the next half hour or so. Last month the spike did reverse creating a double
top off the earlier highs set at the London open. 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.
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. The range of analyst estimates is tighter this
month a 0.4 versus 0.6 last time on the main Core MoM figure. Naturally it is best if all the
deviations on all 4 of the figures agree, as well as the revisions, if there are some.
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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