Profit Mongers @ 3:24 AM, Tuesday November 15 2011
0430 UK CPI y/y headline (+5.1% expected, +5.2% prior, +4.9% to +5.3% range)
Affiliated reports:
-Headline CPI m/m (+0.2% expected, +0.6% prior, 0.0% to +0.3% range)
-Core CPI y/y (+3.2% expected, +3.3% prior, +3.0% to +3.4% range)
-UK RPI y/y (+5.5% expected, +5.6% prior, +5.1% to +5.7% range)
-UK RPI m/m (+0.1% expected, +0.8% prior, 0.0% to +0.3% range)
Last month a +0.3 on the headline y/y provided a quick 30 pip pop higher, which did not last
and within 3 minutes the GBPUSD turned back down and went below pre-release. Much of this
had to do with rumors and leaks before the release, as the number was expected high anyhow,
so much of this was priced in before the release, and the actual release just moved higher
on initial confirmation before the market moved on to other things. The month before there
was a flat reading on headline y/y and m/m althou a +0.1 on Core y/y, and there was just a
small whipsaw and then choppy price action. This one should still react but it is not one
to look for afterspike trades unless there is a very big deviation. Spike trading CPI can
become illogical during times of economic uncertainty as higher inflation does not mean
higher interest rates like it does in normal circumstances. Best to widen triggers out from
+/-0.2 to +/-0.3, and of course if all 3 main figures agree it is best.
If it comes out at 5.4% or higher, GBP/USD should rally 40-70 pips
If it comes out at 4.8% or lower, GBP/USD should fall 40-70 pips
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