JamesThatcher
Well-known member
What does the data mean to the market?
The Consumer Price Index (CPI) measures the change in the price of goods and services from the consumer's perspective. It is a key way to measure changes in purchasing trends and inflation. The impact on the currency may go both ways. A rise in CPI may lead to a rise in interest rates and a rise in local currency. On the other hand, during the recession, a rise in CPI may lead to a deepened recession and a fall in local currency.
The RBA has a dual mandate of reduced unemployment and achieving higher inflation, So we hope a surprise increase in the CPI figures could fuel a new debate for the RBA on when it would begin tapering/reduced quantitative easing.
Historic deviations and their outcome
April 28 2021 Negative deviations on all lines saw a fantastic move; the Trimmed mean was heavily supported by the Headline QQ, pushing the AUD dollar to new lows!
Check out the price action here:
AU CPI (QoQ) 2021-04-28 01:30:00.0
AU CPI (QoQ) 2021-04-28 01:30:00.0
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January 27 2021 Headline Q/Q and Y/Y gave +0.2. Trimmed Mean was flat, though so not ideal. The move was respectable, lasting a good 30 seconds!
Check out the price action here:
AU CPI (QoQ) 2021-01-27 00:30:00.0
AU CPI (QoQ) 2021-01-27 00:30:00.0
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July 29 2020 Trimmed mean gave a -0.2 deviation but we saw a conflict with the Headline CPI QQ and YY with a positive +0.1 so it wasn't a trade for me. It's worth noting that Trimmed Mean won the day and blew away the conflict.
Check out the price action here:
AU CPI (QoQ) 2020-07-29 01:30:00.0
AU CPI (QoQ) 2020-07-29 01:30:00.0
calendarapi.galaxysoftwareinc.com
I will use forecasts of:
CPI - Trimmed Mean (Q/Q) 0.5
CPI - Trimmed Mean (Y/Y) 1.8
CPI (Q/Q) 0.8
CPI (Y/Y) 3.1
Today's trade plan
If we see a deviation from the forecast of 0.3 on either line. Trimmed Mean CPI Q/Q or Trimmed Mean CPI Y/Y in either direction with no conflicts from the Headline CPI QQ and CPI YY. If they line up, we should see a prolonged move that we can bank some good pips from.
Tradable pairs
AUDCAD
AUDJPY
AUDNZD
AUDUSD
EURAUD
GBPAUD
Hope this helps but please do your own analysis!!
Good luck!!
James Thatcher
Trading foreign exchange on margin carries a high level of risk, and may not be suitable for all investors. Past performance is not indicative of future results. The high degree of leverage can work against you as well as for you. Before deciding to invest in foreign exchange you should carefully consider your investment objectives, level of experience, and risk appetite. The possibility exists that you could sustain a loss of some or all of your initial investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with foreign exchange trading, and seek advice from an independent financial advisor if you have any doubts.