Hi guys I thought that i should share my feelings about the Canadian CPI,May be some of you would say that this report isn’t worth seeing but i think that tomorrow’s report could create some volatility in the Canadian pairs.
The main reason behind this that Bank of Canada has really hawkish feelings about their economy and in the last speech the governer of BoC said that they will be looking to remove some stimulus from the economy which indirectly mean the interest rate hike!
So why am i looking at the CPI report so carefully?
Now,If u guys have paid attention in the classes at babypips.com in the lesson “Interest rate” than u must know that increasing interest rates leads to the slow inflation.Of course we all know that the CPI is the direct measurement of the inflation.Now if the CPI report come in better-than-expected tomorrow it could move the Canadian dollar in the positive direction but i think that it will lead BoC to think about the interest rate hike seriously.May be in their upcoming interest rate decision they will go for an interest rate hike which could result in a huge CAD buying.
In their March CPI report the Core CPI m/m and core CPI y/y came at 0.3% and 1.9% respectively,as market expected so that’s why no significant move in the CAD pairs was noted.The only negative reports were the CPI m/m and CPI y/y which were slightly less than the forecast which caused the CAD to move in the negative direction by 12 pips suddenly.
Well it’s just my 2cents opinion i will be looking forward to your comments in my thread.
Thanks,
Muhammad Nauman Nadeem
I agree, the Canadian CPI release does present opportunities to catch a few pips, especially if the report misses or beats expectations. You’ve also made an excellent point about Canada being one of the stronger economies presently, which makes the BOC relatively more hawkish than other central banks. I’m glad you took some time to make a thorough analysis based on the interest rate and monetary policy lessons in the School of Pipsology, and I’m on the same boat with you on this one. If there’s a central bank that’s most likely to hike rates soon, that’d probably be the BOC. A strong CPI would mean that they do have room to tighten monetary policy, which could boost the Canadian dollar against its counterparts. Be mindful though that risk sentiment isn’t really on the higher-yielding currencies’ side (Loonie included) these days so weak demand for risk could also be another factor restricting the Loonie’s gains. In any case, I’m also keeping my eyes peeled for the Canadian CPI release as always and I’ll be keeping your analysis in mind. Good job!
ya dear muhammad, you had made your point here, which i think it’s reasonably good, but due to risk aversion sentiment, i would not risk any buying high yielding currency… i’ve better stick to the majority where’s focused… so still i think a raise in CPI would not really make a huge surge, and yet the forecast CPI is lower than previous month figure.
Well i think that we might see some noise at the release of the CAD CPI but i think that catching 15-20 pips won’t hurt my trading style.Course,the demand for Higher-yielding currencies is really low,but i am not saying that a strong CPI will cause the CAD to move above 50-60 pips but who knows that what could be the catalyst in the market for the risk-takers?