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United States Core CPI m/m April 13 2021


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United States Core CPI m/m April 13 2021

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  #1 (permalink)
 JamesThatcher   is a Vendor
 
 
Posts: 27 since Apr 2021
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What does the data mean to the market?

The Core Consumer Price Index (CPI) measures the changes in the price of goods and services, excluding food and energy. The CPI measures price change from the perspective of the consumer. It is a key way to measure changes in purchasing trends and inflation.

A higher than expected number is positive/bullish for the USD, a lower than expected number is negative/bearish for the USD.

There are 4 lines of data.

Headline CPI - Core (M/M)
CPI - Core (Y/Y)
CPI - (M/M)
CPI - (Y/Y)


Historic Deviations and Their Outcome

March 10 2021 We got a +0.1 on both core lines gave a nice 15 pip move on USDJPY ; that's a really nice move for such a small deviation, shows how hot this data is becoming.


February 10 2021 Check out last months 0.2 deviations, and bear in mind that I expect the same deviations to create a better reaction today!
We can see a small but gradual move over the first one minute.



November 12 2020 Most of last year, the same deviations were not moving the market, as conditions were very different then, but I believe the focus is back.





My Forecasts For Today

CPI - Core (M/M) 0.2
CPI - Core (Y/Y) 1.5
CPI (M/M) 0.5
CPI (Y/Y) 2.5



Today's Trade Plan

The focus is on CPI - Core (M/M) - Headline.

Iím looking for a Deviation of 0.2% or greater in either direction from the forecast of 0.2% to take a trade.

So, an actual figure of 0.0% to Sell USD or 0.4% to Buy USD.

We would need to confirm no conflict on any of the other three lines!

CPI - Core (Y/Y)
CPI - (M/M)
CPI - (Y/Y)

If they all lineup, we should bank some good pips today.


Tradable Pairs

USDJPY


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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 Schnook 
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Well the numbers all came within a smaller deviation and the market's reaction both in yen and bonds suggests that traders were well prepared for such an event. Now seeing a bit of a relief rally.

Thanks for posting the above, but I'm also curious how you approach data releases like this, given the speed with which market making algorithms react to these events. A 15 pip move, as described above, can easily happen before a human brain is even able to process the move. So do you place stop-order entries on either side of the market to try to enter a directional move as quickly as possible? Or do you evaluate the data with your own brain and then manually trade (or not trade) using your own discretion after the algos have already done their thing?

And now that the dollar has weakened after a firmer CPI print, are you fading? Has the relief bounce run its course or do you think there's more room to squeeze?

I've been leaning bearish on Treasuries (a somewhat correlated position to JPY) into this week's supply but had my trailing stops tagged on this morning's bounce so thinking about whether to re-enter some shorts before the bond auction. Keeping eyes fixed on Yen and other related markets here as well

 
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 JamesThatcher   is a Vendor
 
 
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Schnook View Post
Well the numbers all came within a smaller deviation and the market's reaction both in yen and bonds suggests that traders were well prepared for such an event. Now seeing a bit of a relief rally.

Thanks for posting the above, but I'm also curious how you approach data releases like this, given the speed with which market making algorithms react to these events. A 15 pip move, as described above, can easily happen before a human brain is even able to process the move. So do you place stop-order entries on either side of the market to try to enter a directional move as quickly as possible? Or do you evaluate the data with your own brain and then manually trade (or not trade) using your own discretion after the algos have already done their thing?

And now that the dollar has weakened after a firmer CPI print, are you fading? Has the relief bounce run its course or do you think there's more room to squeeze?

I've been leaning bearish on Treasuries (a somewhat correlated position to JPY) into this week's supply but had my trailing stops tagged on this morning's bounce so thinking about whether to re-enter some shorts before the bond auction. Keeping eyes fixed on Yen and other related markets here as well

Thanks for your comments. I work to reply to every comment, each on its merit, so forgive the delayed response.

You are correct; algorithms that get the news and make a trade decision quicker than the human brain can read the numbers do exist. I am also using my bespoke software with multiple news feeds, which is tried and tested and does the job in record time. My trade plans always look for a set-up that will provide a continued price action after the initial spike. An auto clicker would suffice for entry, although this adds risk unless you are using slippage control. It's possible to take a manual entry after the initial release with the numbers I put out on my trade analysis. Usually, within the first minute, the price will pull back and allow anyone to get in at a reasonable price. Even if you end up at the end of the initial spike, the move should continue. My advice would be to get yourself into a break-even situation asap.

I solely do news trading; it's what I've spent the last ten years perfecting. I don't keep my trades open for longer than a few minutes; I like to catch the initial move and cash out.

There's almost always consolidation after a significant news event before the market decides on a longer-term position. By the time this happens, I've usually shut down my PC, relishing some time with my family or walking my dog.

You are correct. Correlations between FX, bonds, futures, treasuries, indices are present. However, trading medium or long term is not my thing. I only look to trade something if the news moves it, has good leverage and an excellent historical success rate. This has worked well for me. I have earned a decent full-time living from this strategy for many years now. Could you have a look at my results in April? I only took three trades; two resulted in a win, one resulted in a loss. This ratio was enough to make it a profitable month, and I'm happy with that.

Thanks again for your comments and interest. If you want to know more about me or my trading system, please contact me directly.

James Thatcher

 
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 JamesThatcher   is a Vendor
 
 
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What does the data mean to the market?

The Unemployment Rate released by Statistics New Zealand is the number of unemployed workers divided by the total civilian labour force. If the rate is up, it indicates a lack of expansion within the New Zealand labour market. As a result, a rise leads to weaken the New Zealand economy. A decrease in the figure is seen as positive (or bullish) for the NZD, while an increase is seen as negative (or bearish).

There are two main data lines from this report Unemployment Rate and Employment Change; both must deviate in the same direction to take a trade.


Historic deviations and their outcome

February 2 2021 A positive deviation of -0.7 from the headline Unemployment Rate with a complementary positive deviation of +1.4k on the secondary line Employment Change which gave a slow move. This is what I love to see.

I saw some movement before the delivery of the news which is always a concern and often a sign that the news is out early but I held my nerve this time and it paid off.

Overall the price action was excellent.


I will use forecasts of:

Employment Change (Q/Q) 0.3
Unemployment Rate 4.9



Today's trade plan

If I get either a positive or negative deviation of 0.4 from the headline Unemployment Rate without a conflict from the secondary line of Employment Change, then I would expect a good initial move followed by some continuation after the initial spike.

Please note that the standard deviation on today's forecast range is significantly smaller than the last quarterly release, so I would expect the data to cause a better market reaction this time.

New Zealand is the first country to emerge from Covid lock downs and hopefully, news events will continue to work. Unfortunately, the RBNZ is currently neutral regarding its stance on which way interest rates might go in the future. Which doesn't help to achieve those large rapid moves I used to see back before Covid came around.


Tradable pairs

EURNZD
GBPNZD
NZDJPY
NZDUSD


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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 JamesThatcher   is a Vendor
 
 
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What does the data mean to the market?

The data indicates the number of crude oil barrels held by commercial firms in the US; this inventory is taken weekly and indicates increases or decreases needed in supply, affecting the price. A Positive number is bad for the oil price and vice versa.

Other oil data is released the night before this report, API Weekly Crude Oil Stock, which the market looks for as an indicator of today's report, which can gauge how it will respond, so it's worth keeping an eye on that also.

There are two mainline of data to focus on. DOE Gasoline Inventories and DOE Crude Oil Inventories, the two lines must not conflict to make this data tradable; Oil is the driving force behind this report.



Historic deviations and their outcome

April 28 2021 Minimal deviation from forecast with no conflict from Gasoline, It was a no-trade for me; however, I saw a healthy 30 pip move in the direction of the news. Oil was already in an upwards trend which continued pre and post news.

See Chart here:
https://calendar.galaxysoftwareinc.com/#/chart;i=43410;t=2021-4-28%2014:30:00.0;s=USDOIL;r=M1

April 21 2021 Oil deviation wasn't even half of what I set up for no trade for me, take a look at the chart though, the price moved in the right direction of the news and immediately reversed and went the wrong way. A reminder that this needs a sizeable deviation from the forecast.

See Chart here:
https://calendar.galaxysoftwareinc.com/#/chart;i=41182;t=2021-4-21%2014:30:00.0;s=USDOIL;r=M1

April 14 2021 Nice move! But it didn't hit a trigger for me.

See Chart here:
https://calendar.galaxysoftwareinc.com/#/chart;i=38793;t=2021-4-14%2014:30:00.0;s=USDOIL;r=M1




I will use forecasts of:

DOE Crude Oil Inventories -3000
DOE Gasoline Inventories -2000



Today's trade plan

If I get a deviation of -/+ 4000 in either direction from the forecast on Oil and no conflicts from Gasoline, we can expect a sustained move from Crude Oil or Brent.

Please note that I have used hybrid forecasts to accommodate the following: -

1) DOE Crude Forecast = +850
2) API Actual Crude = -7700
3) DOE Gasoline Forecast = -0652
4) API Actual Gasoline = -5300



Tradable pairs

USDBNT
USDOIL


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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 JamesThatcher   is a Vendor
 
 
Posts: 27 since Apr 2021
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We saw both lines of data deviate in the same direction, but the headline only gave a -0.2 deviation which wasn't enough for me. Price action was excellent, seeing some 40 pips in the two minutes directly after the news was released. The move was staggered and slow if I had have traded, I'm sure my fill price would have made for significant profits. Good to see reactions like this.



See Chart here:
https://calendar.galaxysoftwareinc.com/#/chart;i=49879;t=2021-5-4%2022:45:00.0;s=EURNZD;r=S1

 
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 JamesThatcher   is a Vendor
 
 
Posts: 27 since Apr 2021
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What does the data mean to the market?

The Central Bank of the Republic of Turkey's (CBRT) Monetary Policy Committee votes on setting the overnight interest rate. Traders watch interest rate changes closely as short term interest rates are the primary factor in currency valuation.

A higher than expected rate is positive/bullish for the TRY (Turkish Lira), while a lower than expected rate is negative/bearish.


Historic deviations and their outcome

March 18 2021 +1.0 positive deviation from the forecast, which gave a nice move of 750 pips in the first minute, then great continuation afterwards, too!

See Chart here:
https://calendarapi.galaxysoftwareinc.com/l/34208/aHR0cHM6Ly9jYWxlbmRhci5nYWxheHlzb2Z0d2FyZWluYy5jb20vIy9jaGFydDtpPTM0MjA4O3Q9MjAyMS0zLTE4JTIwMTE6MDowMC4wO3M9VVNEVFJZO3I9UzEw

December 24 2020 +0.5 positive deviation from the forecast, which gave 475 pips in one minute.

See Chart here:
https://calendarapi.galaxysoftwareinc.com/l/25738/aHR0cHM6Ly9jYWxlbmRhci5nYWxheHlzb2Z0d2FyZWluYy5jb20vIy9jaGFydDtpPTI1NzM4O3Q9MjAyMC0xMi0yNCUyMDExOjA6MDAuMDtzPUVVUlRSWTtyPU0x

October 22 2020 -1.75 negative deviation from the forecast, which created a great move! With over 900 pips in the first minute.

See Chart here:
https://calendarapi.galaxysoftwareinc.com/l/23557/aHR0cHM6Ly9jYWxlbmRhci5nYWxheHlzb2Z0d2FyZWluYy5jb20vIy9jaGFydDtpPTIzNTU3O3Q9MjAyMC0xMC0yMiUyMDExOjA6MDAuMDtzPUVVUlRSWTtyPU0x




I will use forecasts of:

Benchmark Rate 19



Today's trade plan

24 economists all forecasts today for the rate to stay at 19%

Last time there was an unexpected hike in rates, President Erdogan sacked the central bank governor. Today is the first policy announcement from the new governor Sahap Kavcioglu, who's under pressure to cut rates. So far, he has signalled he won't cut yet but let's see!

Realistically the only feasible outcome from today is a possible cut. So if we get a deviation of 1.0 or more, we can expect a continued and prolonged weakening in TRY pairs.



Tradable pairs

EURTRY
USDTRY


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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 JamesThatcher   is a Vendor
 
 
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Today the data came in inline with API. Luckily I use my hybrid forecasts, which incorporates Wednesday evening's API report. If I ignored API, this would have triggered a trade, and I would have taken a loss. This is a good reminder of why the API data is relevant. We saw some very volatile price action before the news was ignored, and price action returned to the downside trend it was in before the report.

See Chart here:
https://calendar.galaxysoftwareinc.com/#/chart;i=49925;t=2021-5-5%2014:30:00.0;s=;r=S1

 
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 JamesThatcher   is a Vendor
 
 
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As expected, there was no change today. Even though the expectation was for no change, should the unexpected happen, missing it would be devastating as we would likely see some fireworks on the price action. I will continue to set up interest rates for this reason. When this scenario happened before, I was happy I had set up.

 
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 JamesThatcher   is a Vendor
 
 
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What does the data mean to the market?

The headline data of Non-Farm Payrolls (NFP) reflects the change in the number of people employed during the previous month. A higher number of people employed is good for the US economy and would create a buy on the USD. Vice versa, a lower number would be bad for the US and would generate a sell on the USD.

NFP comes out with six lines of data which makes this report far more complex. The other two significant lines of data I watch are the Unemployment Rate and Average Earnings.
With UR a lower number is good for the US and vice versa. Whereas AE a higher number is better for the US economy and vice versa.

All three lines must deviate in the same direction. I will not tolerate a conflict from either UR and AE.


Historic deviations and their outcome

April 2 2021 A very large deviation to the upside, but accompanied by conflicting Average Earnings, created a whipsaw that we don't like to see. This, therefore, did not hit our triggers and for good reason!

See Chart here:
https://calendar.galaxysoftwareinc.com/#/chart;i=35213;t=2021-4-2%2012:30:00.0;s=USDJPY;r=M1

March 5 2021 +197k positive deviation with no conflicts. The move was great on USDJPY! I don't trade stocks, but for those that do, look how they reacted, which was the opposite of the USD value. Better employment numbers suggest a tightening of monetary policy, which is not good for the stock market!

See Chart here:
https://calendar.galaxysoftwareinc.com/#/chart;i=33099;t=2021-3-5%2013:30:00.0;s=USDJPY;r=M1

February 5 2021 - 56k negative deviation on headline number but conflicting Unemployment and Average Earnings, However, USDJPY went in the direction of the headline number on this occasion. It wasn't a trade for me!

See Chart here:
https://calendar.galaxysoftwareinc.com/#/chart;i=28009;t=2021-2-5%2013:30:00.0;s=USDJPY;r=M1




I will use forecasts of:

Average Hourly Earnings (M/M) 0
Change in Non-Farm Payrolls 1000
Unemployment Rate 5.8



Today's trade plan

Today the forecast range is far larger than last month, so we must be aware of that. If we see 300k deviations in either direction from Non-Farm Payrolls without any conflicts from Unemployment and no significant conflict from Average Earnings, we can expect an excellent move. This one can get volatile immediately after the data is released while the market digests the numbers. Hold onto your hats. This one is not for the fainthearted.


Tradable pairs

USDJPY


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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