Trading the news: Canada consumer price index why this event is important: a rebound in price growth could a bullish reaction in the Canadian dollar spark, as inflation of the Central Bank target of 2 approaches can more %, and the Bank of Canada under scope monetary policy to normalize how it maintains its dual mandate to maintain price stability in the promotion of full employment in the coming months. However, the last batch fundamental developments suggest that is marked increase of economic activity slowly tapering in the second half of the year and the current buffer time within the price sector could price pressure steaming, as the Central Bank lowers its growth forecast for the region. What is expected is: time of release: 10/22/2010 11: 00 GMT, 7: 00 EST primary pair impact: USDCAD expected: 1.9%: 1.7% this will be market moving (scenarios): consumer prices in Canada are a annualize to increase speed of 1.9% which would be the highest reading since January while the core inflation rate is projected to keep predicts steady at 1.6% for the third consecutive month in September. However, as the BoC see inflation holding 2% objective by 2012, it is that we see, could a lower than expected heading reading for inflation that might trigger a sell-off in the Canadian dollar as investors weigh the prospects for the future policy a big risk. The upside as you company spending Canada at the fastest pace in four years, with prices for raw materials increase for the second consecutive month in August, expands can companies to higher costs for consumers in your profitability increase passed. A higher rate which could lead to inflation, which track USD/CAD the sharp ahead, carried over from the previous week, as investors speculate the BoC borrowing costs more to increase in the coming months, and exchange rate work its way back towards parity can as market participants expect to facilitate the Fed monetary policy. As the recovery of in economic activity from the downside however, with the GDP dropped 0.1% in July, tips the slack in the real economy on inflation could wear down how households keep a lid on consumption. An unexpected decline in which could price growth increased weakness in the wing Canadian currency and the exchange rate can trace continues to decline the previous month as interest rate expectations falter. How to trade this event risk expectations for a rebound in price growth certainly a bullish Outlook for the Canadian dollar and price action following benefits could share the stage for a long Loonie trading set how inflation of the Central Bank approaches target of 2%. Therefore, extend the CPI to an annualized 1.9% or higher in September we should find red, five minutes a candle for the data to generate a sale listing on two lots of USD/CAD under. Once these conditions are met, we will get the first stop on the high or a reasonable distance close nearby swing and this risk is our first goal set up. The second objective will be based on discretion and we go to the stop on the second batch, costs, once the first trade your brand reach in order to lock in our profits. In contrast the uncertainties on the Economic Outlook that coupled with the cautious tone held by the BoC could cause the company to keep a lid on prices, and a gloomy inflation report could weigh on the exchange rate as investors back scale expectations for a different interest rate increase this year. As a result, if price growth keeps stable at 1.7% or unexpectedly contracts of the previous month, we will implement trade than the short position above, only in reverse order the same strategy for a long $Loonie. Potential price targets for the release
impact of Canadian consumer price index had on CAD change during the last month (1 hour post event) pips change pips (end of day post event) August 2010 Canada consumer price index for consumer prices in Canada slipped 0.1% in August amid predictions for a flat read while the heading for the inflation unexpectedly dragged back above read month to an annual rate of 1.7% from 1.8% in the. At the same time the core CPI held steady at an annualised 1.6% for the second consecutive month, and subdued price growth could turn adopt, as it aims to the Bank of Canada, a wait and see approach in the coming months, to balance the risks to the region. The breakdown of the report showed coupled with a 0.4% decline in energy prices on food costs fell 0.2% in the course of the month, while prices for clothing and footwear rose by 1.5% to 1.0% contraction in July. The BoC maintains a cautious tone for the region and provides the selected rebound in economic activity Konik, the Central Bank can look to that to keep benchmark interest rate at 1.00%, while the rest of the year remains clouded as growth prospects uncertain.
What to look for before the release traders with access to detailed information about FXCM Active Trader platform can market it to the effectiveness of release and aimed a the market bias illuminate business measuring using. Boost volume before the announcement will probably follow through behind independent move is, while an imbalance in available liquidity to offer compared to the offer page of market direction will tell us large institutions are likely before the announcement favoured to materialize, telegraph: bullish scenario: when we see substantially lower available liquidity on the bid side of the market, this tells us that great looking price providers on the market against the Canadian dollar to buy USD. Given that 60% all FX market volume by only six top banks is disabled, we see on the same page of trade as major institutions are clever, and will facilitate a bullish bias on USDCAD prior to release data. Bearish scenario: When we substantially lower available liquidity on the page see offer of the market, says this us this important Prize providers on the market looking to sell USD against the Canadian dollar. Given that 60% of all FX market volume by only six top banks is disabled, we see on the same page of trade as major institutions are clever, and will facilitate a bearish biases on USDCAD prior to release data. Ask? Comments? Join the us in the DailyFX Forum to discuss this report contact David song, currency Analyst: dsong@fxcm.com
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