Forex Trading Signals by Magister Pips, 2012/02/17
0830 US CPI Ex Food & Energy (Core) m/m (+0.2% expected, +0.1% prior, +0.1% to +0.3% range)
Affliated Reports:
Headline CPI m/m (+0.3% expected, 0.0% prior, +0.1% to +0.4% range)
US CPI Ex Food & Energy (Core) y/y (+2.2% expected, +2.2% prior, +2.1% to +2.4% range)
Headline CPI y/y (+2.8% expected, +3.0% prior, +2.7% to +3.0% range)
Last month this came out with Housing Starts, Initial Jobless Claims at the same time. The CPI
was mostly flat, housing weaker but the IJC was better. The Emini S&P 500 whipsawed fron 1308->1309
down to 1306 then back to 1309. The USDJPY did drop a few pips but caught a bid about 10 minutes
after the release, taking it from 76.80 to 77.00. Like The Emini the CADJPY initially popped higher
about 10 pips then reversed this and retesting its pre-release low then rallied. Anyhow not anything
one would want to get caught up in. In December, this came out with a +0.1 deviation on its own,
USDJPY had a brief spike and whipped right back down below pre-release within 2 minutes. The CADJPY
also pushed down abruptly a couple of minute after the release, while the EURUSD rallyed 20 pips for
10 minutes then also fell. In the current environment of low Interest Rates, the CPI is probably the
worst news to trade, as higher inflation doesn't necessarily mean higher rates. Instead it can mean
the Fed is more hesitant to do more QE, but with better US data, QE3 is not likely and the Fed was
only jawboning the market by hinting at in in their last FOMC meeting. However recently the USDJPY
has shown great strength. It broke its 4.5 year weekly trendline 2 days before the last FOMC but
when the Fed hinted at QE3 it sold back to 76.00, but now again with better US data it has lifted
and is showing alot of continuous upward momentum, all small retracements being bid, and is already
up at 79.20. How quickly things can change. The USDJPY has a tendancy not to move much but then have
these big large move suddenly that just run and run. So it might be an option to get long USDJPY on
a higher CPI print today. Anyhow this one usually doesn't deviate more than 0.1, but this deviation
is not very reliable. There was a 0.2 in Feb 2010 which caused a 20 pip move and another in May 2009
which had a 15 pip spike and then continued for another 15 pips.
If it comes out at 0.4% or higher, make sure other 3 CPI figures are flat or agree,
USD/JPY should rally 20-35 pips or CADJPY 30-50 pips and EMini should rally 3-8 points
If it comes out at 0.0% or negative, make sure other 3 CPI figures are flat or agree
USD/JPY should fall 20-35 pips or CADJPY 30-50 pips
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