DailyFX.com –
– U .S. Consumer Price Index (CPI) to Rebound to Annualized
1.1% in April.
– Core Rate of Inflation Expected to Slow for
Second-Consecutive Month.
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Trading the News: U.S. Consumer Price Index (CPI)
Despite forecasts for a rebound in the U.S. Consumer Price
Index (CPI), another slowdown in the core rate of inflation may
dampen the appeal of the greenback and spark a near-term advance
in EUR/USD as it drags on interest-rate expectations.
What’s Expected:
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Why Is This Event Important:
Even though Fed officials see scope for two rate-hikes in
2016, signs of a slower-than-expected recovery may push the
Federal Open Market Committee (FOMC) to further delay the
normalization cycle amid the external risks surrounding the real
economy.
Expectations: B earish Argument/Scenario
Release
Expected
Actual
Non-Farm Payrolls (APR)
200K
160K
ADP Employment (APR)
195K
156K
Gross Domestic Product (Annualized) (QoQ) (1Q A)
0.7%
0.5%
Easing job growth accompanied by signs of a slowing recovery
may push U.S. firms to offer discounted prices, and a
softer-than-expected CPI report may weigh on the greenback as
market participants push out bets for the next Fed rate-hike.
Risk: B ullish Argument/Scenario
Release
Expected
Actual
Advance Retail Sales (MoM) (ARP)
0.8%
1.3%
Personal Income (MAR)
0.3%
0.4%
Average Hourly Earnings (YoY) (APR)
2.4%
2.4%
However, stronger wage growth paired with the rebound in
private-sector spending may boost consumer prices, and a pickup
in the headline & core rate of inflation may spur a bullish
reaction in the U.S. dollar as it puts increased pressure on the
Fed to implement higher borrowing-costs.
How To Trade This Event Risk (
Video
)
Bearish USD Trade: Core Rate of Inflation Narrows to 2.1% or
Lower
Need green, five-minute candle following the print to
consider a long position on EUR/USD.
If market reaction favors a bearish dollar trade, buy
EUR/USD with two separate position.
Set stop at the near-by swing low/reasonable distance from
entry; look for at least 1:1 risk-to-reward.
Move stop to entry on remaining position once initial
target is hit; set reasonable limit.
Bullish USD Trade: U.S. CPI Report Exceeds Market Forecast
Need red, five-minute candle to favor a short EUR/USD
trade.
Implement same setup as the bearish dollar trade, just in
reverse.
Potential Price Targets For The Release
EURUSD Daily
Chart – Cre ated Using
FXCM Marketscope 2.0
Following the failed attempt to test the August high
(1.1713), EUR/USD may continue to give back the advance from
the previous month as it remains stuck in a descending channel
formation, with a near-term hurdle coming in around 1.1210
(61.8% retracement) to 1.1230 (38.2% retracement).
Interim Resistance: 1. 1760 (61.8% retracement) to 1.1810
(38.2% retracement)
Interim Support: Interim Support: 1. 0380 (78.6% expansion)
to 1.0410 (61.8% expansion)
Check out the
short-term technical levels that matter for
USD/CAD
heading into the report!
Avoid the pitfalls of trading by steering clear of classic
mistakes. Review these principles in the ”
Traits of Successful Traders
” series.
Impact that the U.S. Consumer Price report has had on EUR/USD
during the previous month
Period
Data Released
Estimate
Actual
Pips Change
(1 Hour post event )
Pips Change
(End of Day post event)
MAR 2016
04/14/2015 12:30 GMT
1.0%
0.9%
+22
+13
March 2016 U.S. Consumer Price Index (CPI)
The U.S. Consumer Price Index (CPI) unexpectedly narrowed in
March, with the headline reading slipping to an annualized 0.9%
from 1.0% the month prior, with the core rate of inflation
following suit as the figure slowed to 2.2% from 2.3% during the
same period. A deeper look at the report showed a 1.1% decline in
prices for apparel, which was accompanied by a 0.2% drop in
prices for food/beverages, while transportation costs increased
0.4% as energy prices climbed 0.9%. The greenback struggled to
hold its ground following the weaker-than-expected CPI report,
with EUR/USD advancing from the 1.1250 region to end the day at
1.1265.
Get our top trading opportunities of 2016
HERE
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Read More:
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Gold
AUD/CAD Into Key Support- Monthly Opening Range
In Focus
US Dollar Bear Trap within an Even Bigger Bull
Trap?!
USD/JPY Technical Analysis: Has It
Bottomed?
— Written by David Song, Currency Analyst
To contact David, e-mail dsong@dailyfx.com. Follow me on
Twitter at @DavidJSong.
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follow this link
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