Forex News Trading Canada Core CPI

CPI is also known a Inflation and our focus will be on the Core Inflation figure, also known as CPI excluding Food and Energy, or CPI ex Volatile Items…

Here´s the forecast:
7:00am CA Core CPI m/m Forecast -0.2% Previous 0.1%
ACTION: USD/CAD BUY -0.4% / SELL 0.2%

The Trade Plan
The Core CPI report will be released today and our deviation for this release, based on a historical track record, around 0.3%. Therefore, look for tradable figures of -0.4% or worse to BUY USD/CAD, or a +0.2% or better to SELL USD/CAD.

Keep in mind to look for an after-news retracement trade for this release. I´ll wait for the release, then the initial market move, and wait for a decent retracement before jumping in.

The Market
What I wrote last four CPI releases…

Market speculations for BOC hiking rates have diminished due to recent global economic slowdown and the possiblity of a sovereign default in Europe. However, BOC has already started the process of withdrawing stimulus and as soon as inflation pressure increases, BOC will be in a position to hike interest rates. With US Federal Reserve introducing more stimulus, CAD may very well remain strong until mid 2012.

… still remains true, but with the recent focus on China and the possibility for a reduction in the bank reserve requirement (RRR), we could see a rally in commodities, which will undoubtedly boost CAD in the short run.

Additional Thoughts
USDCAD may stall until the equity market opens; therefore I´d recommend use patience when trading this pair during 7:00am hour. Also Core CPI rarely surprises much, so if we do not get our deviation, just stay out of the market until U.S. market opens.

Pre-news Consideration
There is no pre-news trading for this event.

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”.