Profit Mongers @ 7:19 AM, Friday December 16 2011
0830 US CPI Ex Food & Energy m/m (+0.1% expected, +0.1% prior, 0.0% to +0.3% range)
Affliated Reports:
Headline CPI m/m (+0.1% expected, -0.1% prior, -0.1% to +0.4% range)
Core CPI y/y (+2.1% expected, +2.1% prior, +2.0% to +2.3% range)
Headline CPI y/y (+3.5% expected, +3.5% prior, +3.3% to +3.7% range)
Last month flat on Core figures and -0.1 on Headline lead to just whipsaw. Back in October
just a -0.1 on the Core numbers but flat m/m and +0.1 y/y for the headline figures. Not really
big but usdjpy did slowly easy off over the next 90 minutes. This was also seen on
the CADJPY which had a much better move in terms of pips about 45, while $Yen barely made 15
pips. It is not often that the Core CPI m/m figure comes in with a +/-0.2 tradable deviation,
Feb 2010 was the last time. This caused a 20 pip move, but there was no retracement trade. Many
of the +/-0.1 over the past year have yeilded 15-30 pips, some were just quick blips, others
continued, 1 or 2 were whipsaws. The next 0.2 deviation is not until May 2009, and on this one
there was a 15 pip initial spike which continued for the next few minutes to extend another 15
pips without retracement for a total of +30. News has been difficult with the current Risk-off
sentiment, and CPI figures are the ones most affected, because higher inflation will not mean
higher rates, just that it is harder for the FOMC to do more QE. Also volume is very thin as
Christmas holidays approach and many choose to sit on the sidelines while there is more resolution
out of Europe on the current agreements.
If it comes out at 0.3% or higher, make sure other 3 CPI figures are flat or agree
USD/JPY should rally 20-35 pips or CADJPY 30-50 pips
If it comes out at -0.1% 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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