Heya people, sorry to open the post on a negative note but i have to start it with a big “yaaaaaaawwwwwwwnnnsss”. Well, why i am throwing tantrums again? You see, i can’t even remember when is the last time we hit a tradeable report. The NFP about 2 weeks ago was a close call but everything else from then on has just under-performed. Well, forgive my antics, here comes the factual stuff.
We were watching the US Core CPI m/m report. It was a perfect forecast and news release at 0.2% and with absolutely no deviation, and if you haven’t already realised by now, it was a no trade. As expected, the market hardly reacted with such a stale number release.
What is happening today is that we have the Core CPI m/m report of CAD and the Unemployment Claims report of the US coming out. We will be focusing on the Core CPI m/m report of Canada. This report is the derivative of the Consumer Price Index (CPI) that excludes the eight most volatile items, including fruit, fruit preparations and nuts, vegetables and vegetable preparations, mortgage interest costs, natural gas, fuel oil and other fuel, gasoline, inter-city transportation, and tobacco products and smokers’ supplies. CPI with the exclusion of these volatile components is thought to be a better indicator of the underlying inflation trend and the central bank uses it as their primary inflation gauge, aiming to keep it at an annualized rate of 2%.
This report will be released at 0700 hrs NY time, 1900 hrs, SGT time. We will be looking for a deviation of at least 0.2% to enter this trade. I am getting conflicting consensus of 1.4% and 0.3% on this report. I am sure this will be more clearly defined as it gets closer to the report release time. For our records, we shall just take an example based on 1.4% consensus. Therefore, if the indicator is released at 1.6% and higher, it will be good for the CAD and you can go short on USD/CAD. If the report comes out at 1.2% and lower, it will be weakening the CAD and you can go long on USD/CAD. You may also use EUR/CAD to trade this news.
As always, best of luck for your trades.
Take care and god bless,
Seeni
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