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U.S. Core CPI Tomorrow At 1:30pm GMT – Be Prepared!

We at FOREXYARD, encourage our customers to get involved in the most intense market events. As such, we think you should know that U.S. Core Consumer Price Index (CPI) figures are expected tomorrow, February 20th, 13:30 (GMT), and you need to be prepared. Market events like this one tend to create either big changes to current trends or push current trends even further.

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Generally, the majors are the ones most affected by market events in general but Crude Oil, Gold prices, and even the price of Silver can change dramatically in the seconds after such a publication. For more information about the U.S. Core CPI, please read below.

What is the “U.S. Core CPI“?

The Core Consumer Price Index (CPI) is an economic indicator that measures the change in the price of goods and services purchased by consumers, excluding food and energy. The indicator is released on a monthly basis and is seasonally adjusted.

There are many versions of the CPI released by the Bureau of Labor Statistics, but Core CPI is the most widely used by forex traders. Food and energy prices make up a large portion of CPI, but they tend to be very volatile and distort the underlying trend. Therefore they are excluded.

Traders follow this survey very closely because consumer prices account for a majority of overall inflation. Inflation is important to currency valuation because rising prices can force a central bank to raise interest rates to tame inflationary pressures.

If the Survey Comes Inline with Market Forecasts

Expectations for this quarter reveal that the U.S. Core CPI figures will probably rise from 0.0% to 0.1%.

Previous surveys have shown that publications that go inline with market forecasts tend to support the Dollar. They have also shown that in cases where publications have beaten analysts’ forecasts, the market was greatly impacted, and the USD had instantly risen, usually in a dramatic trend.

Because of the perceived economic weakness in the U.S. economy, any measure near the forecasted value may act as another positive to sustain the USD’s recent bullish run against the EUR. We may see a EUR/USD rate of 1.2550 by the weeks end.

If the Survey Will Surprise With Bearishness

When the actual figure is higher than forecasted, investors are likely to see the USD depreciating against its currency pairs and crosses.

In the face of the global recession, previous indicators relating to inflation have shown consistent declining numbers. If inflationary pressures are present in the market, this could put added pressure on the Federal Reserve. The Fed’s ability to reduce inflation is severely restrained with U.S. interest rates close to 0%. This leads us to believe if Core CPI fails to meet expectations, the USD could move lower against the EUR, possibly to the 1.2750 level.