FOREX NEWS SIGNAL

NEWS TRADING

Thursday October 15, 2009

[8:30am NY Time]

US Core CPI Sales BUY 0.3% SELL -0.1% USD/JPY

We are going to look for a surprise factor of 0.2%; if the CPI
number (core) increases to a release at 0.3% then we will BUY of
USD/JPY. If the CPI number decreases to -0.1% or less, we'll SELL
USD/JPY. Historically even at a difference of 0.1%, market is
likely to to exaggerate, therefore if either of our tradable
releases is hit, there is about 80% of chance market will move 50
pips.

Since US CPI is considered as global news event, an unexpected
higher release will probably be considered as risk appetite whereas
an unexpected lower release will probably be considered as risk
aversion. Although I will use the USD/JPY pair a the gauge for risk
sentiment, I might look to EUR/JPY to execute my trade. With recent
market risk appetite sentiment, the best course of action on a
slightly negative release is probably wait for the market to drop,
then take a reversal, that way you will be going with the trend at a
much better position.

DEFINITION:

"CPI, Consumer Price Index, is a statistical estimate of the
movement of the prices of goods and services bought for consumption
purposes by households. Its computation uses price data collected
for a sample of goods and services from a sample of sales outlets in
a sample of locations for a sample of times and estimates of the
shares of the different expenditures in the total covered by the
index which are usually based upon expenditure data obtained for
sampled periods from a sample of households wikipedia)." It is also
known as the "True Cost of Living".