Tuesday 24th March 2015
UK CPI – 9:30am London Time
We want to keep a close eye on both UK and US CPI figures this week because we can look to trade OUT of the events.
For UK CPI we want to look for a negative deviation, because if CPI drops below 0.0% it will cause traders to be wary of when they think the Bank of England will look at raising interest rates. So if this figures comes in lower than expected we could see a sustained fall lower in the GBP across the board – and the reason we think this is because it could cause the Bank of England to delay rate hikes for even longer. However if we get a better than expected reading we could see those fears fade away and we could get some GBP strength for the rest of the session.
We’ve also got a lot of political risks to the GBP due to the upcoming elections which will likely cause the GBP to remain weaker over the coming weeks / months.
US CPI – 12:30am London Time
Last week we had a lot of volatility on the USD due to the FOMC, the market is now a little more cautious about buying the USD as the Fed have made it clear they are data dependent on rate hikes from now on. So the key to keeping the USD rally going will be positive data from the US. If we get a positive deviation we could get a nice positive move higher on the USD however if we get a negative deviation we will likely see the USD fall lower again.
Traders are now using US data points to make their decisions on when the Fed are going to hike rates and how fast it’s going to be. So we want to keep a very close eye on both the CPI and Core CPI