On Thursday 03-19-09 at 7:00 AM ET, the CAD-Core Consumer Price Index report will be released for the month of February.
The previous CAD-Core Consumer Price Index report came out on Wednesday 02-20-09 at 7:00 AM ET.
The CAD-Core Consumer Price Index report released in February, for the month of January, was set up as follows:
Previous Report: -0.4% – down from 0.7% in the January report.
Economists Forecast: -0.2% – an improvement for the Canadian economy.
The actual report: -0.4% – deeper than forecast by -0.2%, bad for the CAD.
The last 4 CAD-Core Consumer Price Index “previous” reports have NOT been “revised” just a few minutes after the actual report release.
The “revisions” could have an had an effect on the currency market – but I have not seen it yet.
I monitored 3 currency pairs during the February CAD-Core Consumer Price Index report and here is what happened:
CAD/JPY – moved in favor the CAD about 43 PIPS in 8 minutes – wrong direction
Did not move in the right direction for 30 minutes
EUR/CAD – moved in favor the CAD about 50 PIPS in 8 minutes – wrong direction
Did not move in the right direction for 9 minutes
USD/CAD – moved in favor the CAD about 53 PIPS in 8 minutes – wrong direction
Did not move in the right direction for 9 minutes
The CAD-Core Consumer Price Index for this month’s release ( a report on February Core Consumer Price Index) has a “forecast” of 0.2%, a increase in the price of goods.
This could cause the Central Bank to raise interest rates in order to fight inflation – thereby increasing the value of the CAD.
If the “actual” CAD-Core Consumer Price Index report comes out less or more than the “forecast” by a large amount, say 0.2% or more, this would be a huge surprise for FOREX traders and the market may move considerably in the following minutes of the report.
So, let’s set this up:
The February previous= -0.4%
The economists forecast= 0.2%
If the “actual” report comes out +0.4% or more, this will be good for the CAD, and a big surprise for traders. Any currency pair which includes the CAD may move with the CAD.
However, if the “actual” report comes out at 0.0% or less, this would be bad for the CAD and again, a big surprise for traders. Any currency pair which includes the CAD may move against of the CAD .
The probabilities set forth above are assuming no unpredictable events are taking place at the same time.
Speeches on the economy by government officials, or a situation somewhere in the world that could have an impact on the U.S. or Canada economy – could adversely affect the market.
Sometime after the end of the CAD-Core Consumer Price Index report I will post the results. So, check back!
Thursday 03-19-09:
Here are the results of CAD-Core Consumer Price Index report:
The “previous” (February report) was -0.4%
The “Forecast” was +0.2%
The “Actual” came out at +0.5% – and no “revision”
A difference of 0.3% from the “forecast” was enough to catch the market by surprise, and since this report was in favor of the Canadian economy, those currency pairs which involved the CAD, the market should have moved favor of the CAD.
However, I believe that the current world economic situation is causing a bit of confusion for FOREX traders.
Here is how it affected the 4 currency pairs I follow:
CAD/JPY – moved down about 55 PIPS in 31 minutes – wrong direction
then moved up about 60 PIPS in 19 minutes – right direction
EUR/CAD – moved down about 30 PIPS 1st minute – right direction
then moved up about 65 PIPS in 34 minutes – wrong direction
GBP/CAD – moved down about 25 PIPS 1st minute – right direction
then moved up about 108 PIPS in 42 minutes - wrong direction
USD/CAD – moved down about 28 PIPS 1st minute – right direction
then moved up about 40 PIPS in 19 minutes – wrong direction
then moved down about 170 PIPS in 40 minutes – right direction
It looks like the currency pairs CAD/JPY and USD/CAD were the only tradable currency pairs coming out of this report – patience was key here.
Looks like the USD/CAD currency pair was the best trade today.
