US CORE CPI

NEWS TRADING
Friday April 13, 2012
[8:30am NY Time]

We´ll be trading US Core CPI m/m release tomorrow. CPI or
Consumer Price Index, also known as the "true cost of
living", is what drives Central Banks to raise/cut interest
rate, therefore this release will be widely watched. Here´s
the forecast for the CPI:

8:30am (NY Time) US Core CPI m/m
Forecast 0.2% Previous 0.4%
ACTION: 0.0% BUY EURUSD


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”.


The Trade PlanOur minimum tradable deviation for this release is 0.2%; if the release number (core) decreases to a minimum 0.0% then we will BUY EURUSD. 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.


The MarketFollowing the pessimistic reaction over last week’s NFP, USD is likely to remain in consolidation, and we should look to trade in the direction of SELLING USD, especially also considering the Weekly Jobless Claims numbers…


Additional ThoughtsWith Fed’s mandate on both Unemployment and Inflation, today’s CPI may not be enough to change Fed’s view on their monetary policy, therefore I believe the effect may be short-lived.

Book : Trading For a Living - Alexander Elder

Book : The Intelligent Investor - Benjamin Graham