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What does the data mean to the market?

The Consumer Price Index (CPI) measures the price of goods and services from the consumer's perspective. It is a key way to measure changes in purchasing trends and inflation.

A higher than expected reading is positive/bullish for the CAD, while a lower than expected reading is negative/bearish.


Historic deviations and their outcome

July 28 2021 A minimal 0.1 deviation from forecast on the headline Core CPI M/M with a 0.3 conflict from the secondary line Core CPI Y/Y we saw a seven pip move inline with the headline before retracing and carrying on with the pre news trend. Not trade for me.
Check out the price action here:

June 16 2021 There was no deviation from the forecast on the headline Core CPI M/M. We saw a 0.4 from the secondary line Core CPI Y/Y; however, there was no impact on the price action.
Check out the price action here:

April 21 2021 A minimal 0.1 deviation from forecast on the headline Core CPI M/M with a supporting 0.1 deviation from the secondary line Core CPI Y/Y



These deviations are just not sizeable enough, and the price action wasn't tradable.

Check out the price action here:




I will use forecasts of:

CPI (M/M) 0.30
CPI (Y/Y) 3.40



Today's trade plan

Canadian CPI data is slowly moving more into focus as we approach the July tapering of assets purchases. I hope that now is the right time to see some nice moves when a reasonable deviation should occur.

Therefore today, I will need an unlikely 0.4 deviation from the forecast in either direction from the headline CPI M/M (month on month), including supporting deviations of 0.1 in the same direction as the headline from the other four lines of data that come out at the same time.

Without the comprehensive deviations on all lines, we may not find any continuation to bring us safety and profit.


Tradable pairs

EURCAD
GBPCAD
USDCAD


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.
 
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