The Consumer Price Index, the major gauge of inflation was released out of Canada this Tuesday Nov. 23rd at noon GMT (7am EST). This has been a great report to trade a few years ago but recently it will only cause a short-lived spike. However this month there were quite signicant deviation on all 4 of the main numbers that come out with this report. There are yearly and monthly figures for both a Core Number, which excludes volatile items like energy and food, and a Headline number. Here is the Data:
CANADA OCT CPI CORE M/M: 0.4% V 0.1%E; Y/Y: 1.8% V 1.5%E - No revisions
CANADA OCT CONSUMER PRICE INDEX M/M: 0.4% V 0.2%E; Y/Y: 2.4% V 2.2%E - No revisions
As the 1st chart shows the USDCAD did spike down from near 1.0190 to 1.0165, so there was money to be made trading the spike using the Secret News Weapon, and members in the Profitmonger Live Online Forex Traderoom made money trading it. Price bounced quickly back up to the 61% within the 1st 30 seconds after the news release at around 1.0185 and moved back to below the 38% of the same fib move at around 1.0170 for a quick +15 pip afterspike move. Price did not continue down however and came back to the same 61% level at 1.0185 and held there for over 5 minutes, definately not a good sign. Traders were aware that there was alot of risk aversion in the markets as not only was the situation with EuroZone peripheral debt issues causing this but also there were some shot fired near the border between North and South Korea and alot of tough talk. In risk aversion situations the USD can strengthen as it is a safe haven currency, because it is the biggest most liquid market it can absorb all those in risky assets who want to get home fast.
....So to judge the performance of this CPI release based on what happened to the USDCAD pair is not right, so also included is the 1 minute chart of the EURCAD. As we can see on this chart, this news performed exceptionally well for the afterspike. After about 10 minutes of the release price retraced to the 50% of the previous swing, which included the news spike move, as price was moving down already heading into the release. From this 1.3808 level prices moved down all day as the situation in the EuroZone grew worse as various Euro ministers said things which weakened confidence in the single pair, including Angela Merkel. In fact the trade could have been held for the next day as well as it reached a total of +350 pips.
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