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Uk Cpi

  • #21
  • Oct 17, 2006 5:36am Oct 17, 2006 5:36am
Quoting BurgerKing
Eh???

Lowered CPI = weak economy = therefore STRONG MONEY?

You must be the first one to have said that.

We are talking about UK's CPI not US CPI in that last data
It remains the same for any currencies. U can look over another member statement
  • #22
  • Oct 17, 2006 5:41am Oct 17, 2006 5:41am
Quoting abobtrader
hey, if I knew the answer to that ... I'd be writing this from my yacht!

...also, I'd be careful using a GBP inflation number to call sentiment on the USD. That could be a risky game. Focussing on the pound, this week has the potential to be critical. Tomorrow we have the BoE minutes and the labour mkt report (keep an eye on core wage growth), then on Thursday we have retail sales, and then the first cut of the GDP number on Friday.
Very nice string of posts. Thanks. Where do you get your in depth annal. of the numbers behind the number?
  • #23
  • Oct 17, 2006 5:42am Oct 17, 2006 5:42am
Quoting c1ro
Nice statement btw, what indicators do u use?
I use EMA's ,WMA's and trend lines nothing fancy here, put these MA's on a chart and have a look at what you see you would be surprise.

5EMA, 13EMA, 62EMA and 62WMA and trend line for my price projections.
  • #24
  • Oct 17, 2006 5:43am Oct 17, 2006 5:43am
I think it was RPI that drove the gbp up (not CPI)...
I heard that RPI was their measuring stick... This confirms BULLISH GBP indeed.
  • #25
  • Nov 11, 2006 7:12am Nov 11, 2006 7:12am
UK CPI is in radar again.

Previous: 0.1%
Estimate is 0.3%


Quoting c1ro
No, I dont think so. IF the CPI of a country is weak than it's previous it means the currency will going up and for the PPI is the other hand

Quoting waf_1988
I agree with u, if the CPI is weak than it's previous, the currency will go up.
According to c1ro & waf_1988, IF the actual CPI comes out lower than 0.1%, GBP will go up, therefore BUY GBPUSD


Quoting c1ro
It remains the same for any currencies. U can look over another member statement
US CPI is in radar as well.

Previous: 0.2%
Estimate: 0.2%

And according to c1ro & waf_1988 again, IF actual CPI comes out lower than 0.2% go BUY USD (ie, SHORT GBPUSD, SHORT EURUSD, LONG USDJPY).



After a month of thinking, I still could not understand the above quotes. Can anyone hit me in the head? Am I the only one who dont understand how CPI/PPI numbers affect a currency?
  • #26
  • Nov 11, 2006 9:49pm Nov 11, 2006 9:49pm
Quoting BurgerKing
UK CPI is in radar again.

Previous: 0.1%
Estimate is 0.3%







According to c1ro & waf_1988, IF the actual CPI comes out lower than 0.1%, GBP will go up, therefore BUY GBPUSD




US CPI is in radar as well.

Previous: 0.2%
Estimate: 0.2%

And according to c1ro & waf_1988 again, IF actual CPI comes out lower than 0.2% go BUY USD (ie, SHORT GBPUSD, SHORT EURUSD, LONG USDJPY).



After a month of thinking, I still could not understand the above quotes. Can anyone hit me in the head? Am I the only one who dont understand how CPI/PPI numbers affect a currency?
Hay BK
I'm with u as below if the number weak than prev it is bad for the currency
this from FF
US CPI

<fieldset class="smallfont" style="padding: 4px 10px 2px; width: 70%; margin-bottom: 9px;"> <legend>Definition</legend>

The Consumer Price Index (CPI) measures the rate of inflation experienced by consumers. A rising trend has a positive effect on the nation's currency. The primary objective of the central bank is to achieve price stability; when inflation rises above an annualized rate of approximately 2%, they will respond by raising interest rates to bring prices down. Higher interest rates attract foreign investment, thus increasing demand for the nation's currency. CPI is one of the most closely watched indicators and will usually have a high impact upon release.

</fieldset>

  • #27
  • Nov 11, 2006 10:04pm Nov 11, 2006 10:04pm
bk, you have to understand what inflation is first. inflation is very simply "change in price". so if gas cost $1 today, and next year it cost $2, then you have 100% inflation. the opposite of inflation is deflation. so, now that you understand inflation, you can understand what CPI is. it measures the change in price. it measures inflation. the PI stands for Price Index.

the reason rising inflation is good for the currency is because the central bank (fed, ecb, rba etc etc) will raise rates when inflation goes up. and when they raise rates, people invest in the country because they get a higher rate of return on their money. this creates demand for the domestic currency, and thus the value of the currency rises. LOL after writing this i realize how confusing this stuff is. but sooner or later it becomes second nature.

just know that currencies revolve around interest rates. so traders will be watching anything that effects a country's interest rates. even growth indicators like GDP and Industrial Production are all about interest rates. if you are unsure of how an indicator effects the currency, try to think back to how it effects interest rates that will usually give you the answer.
Relax and be happy.
  • #28
  • Nov 12, 2006 4:32am Nov 12, 2006 4:32am
Merlin:

Along the same lines as your CPI description (thanks); there is an article by Kathy Lien I believe in FXCM someplace. She goes into how the res ponce of the market to any of the indicators changes over time. Example: This year the CPI may move the market more than Retail Sales but next year Retail sales may be the big mover. Of course Non Farm Payroll had been the big gun for several years.

I have been trying to understand why this would be if there are no accounting rules changes. She gave an explanation at the end of the article but it sounded like what I might say when my kids used to ask me " why is the sky blue"; before I knew why the sky is blue.
It would be nice to know your thoughts on this and again thanks for all your insites.
  • #29
  • Nov 12, 2006 6:35pm Nov 12, 2006 6:35pm
the importance of an indicator changes over time because the state of the economy changes (ie the business cycle). for instance, if the economy is in a recession, growth indicators will be the "in" thing, because everyone knows that once some solid growth is seen, the central bank will come off its low interest rate policy. but when the economy is roaring (as some would argue is the current state of the US economy) then traders start looking at inflation to see when/how-much the central bank will raise rates to dampen growth. the central bank wants steady inflation and steady growth. too fast and they raise rates, too slow and they lower rates. they mainly do this to control inflation, which is their #1 stated objective.

but one thing never really changes...its always about interest rates. every indicator in some way comes back to interest rates, find that path and the fundies will start becoming quite clear.

btw, a lot of people have the wrong idea about growth indicators like GDP. the currency does not react positively to good GDP number beause it signals a strong economy, it reacts positively because the central bank is more likely to raise rates with a strong economy. a strong economy also is a sign of pending inflation, and inflation also will cause the central bank to raise rates.
Relax and be happy.
  • #30
  • Nov 12, 2006 9:23pm Nov 12, 2006 9:23pm
Thanks Merlin

I see very clear. Now would that hold true for a currency like the Loonie that seems to increase with the price of oil. That it's really not the oil but the chance that Canada might raise interest rates?
  • #31
  • Nov 13, 2006 4:11am Nov 13, 2006 4:11am
I do know what inflation means - and it boils to the simple fact that with high inflation it implies the money has lowered purchasing power or in other words, lowered value of the money.

however, we are talking about FOREX wherein inflation pushes a particular currency up.

The fundamental reason why inflation causes a currency to rise against another is the fact that central banks WILL raise interest rate of said currency and thus, people tend to support said currency.

THAT was what I have always though and believed since I endered FOREX and I was starting to "question" my "education".

What bewildered me was WHY, after a month, no one commented on how Inflation's relation with forex.
  • #32
  • Nov 13, 2006 11:16am Nov 13, 2006 11:16am
Quoting bapxyz
Now would that hold true for a currency like the Loonie that seems to increase with the price of oil. That it's really not the oil but the chance that Canada might raise interest rates?
the "path" here is a little more tricky...

high oil prices are good for canadian economy, because of their oil sands. when oil is high, it means that there will be more reliance on canada's oil sands.

high oil prices = stronger economy = higher inflation = greater chance of higher rates
Relax and be happy.
  • #33
  • Nov 13, 2006 11:18am Nov 13, 2006 11:18am
Quoting BurgerKing
What bewildered me was WHY, after a month, no one commented on how Inflation's relation with forex.
we are always talking about inflation! when we talk about CPI, PPI, capacity utilization, etc etc, we are talking about inflation!

btw burger, i knew you had a grasp on these concepts already, you were just looking for confirmation. i just went "in-depth" for the sake of everyone else who is also confused. hope i could help a bit!
Relax and be happy.
  • #34
  • Nov 13, 2006 11:20am Nov 13, 2006 11:20am
Quoting merlin
high oil prices = stronger economy = higher inflation = greater chance of higher rates
btw, in case you are confused, this is the "path" i am talking about. try to make one of these for your chosen indicator. the right side will always be "greater chance of higher rates", and just to the left of that will most likely be "higher inflation".
Relax and be happy.
  • #35
  • Nov 13, 2006 4:16pm Nov 13, 2006 4:16pm
Outstanding

As far as I am concerned you can go "in depth" any time you want.

Thanks
  • #36
  • Nov 13, 2006 4:17pm Nov 13, 2006 4:17pm
O Sh**

That did not come out quit the way I ment it but thanks anyway.
  • #37
  • Nov 13, 2006 5:15pm Nov 13, 2006 5:15pm
Canada's currency has, in recent years, become a "Petro-Currency"
There are enormous oil reserves in the Alberta Tar sands...but somewhat difficult to get at for lack of a better word. So goes the price of oil...so goes the Loonie n'est Pas?


Quoting bapxyz
Thanks Merlin

I see very clear. Now would that hold true for a currency like the Loonie that seems to increase with the price of oil. That it's really not the oil but the chance that Canada might raise interest rates?
  • #38
  • Nov 13, 2006 5:29pm Nov 13, 2006 5:29pm
Can anyone post how much has the 'spike' moved after the news annoucement? If the numbers are bad, and the spike happened opposite of the 'known' or 'past' direction of the news, how long was the movemnt til it faded?

It could be that there are other concensus who has different numbers than FF, which caused the spike to go in such a direction.
  • #39
  • Nov 13, 2006 7:21pm Nov 13, 2006 7:21pm
Anyone care to comment about the forecast of result?
  • #40
  • Nov 13, 2006 8:28pm Nov 13, 2006 8:28pm
UK Think Thank NEISR is worried that Inflation in UK is getting too hot and they were clamoring for 2 rate hikes...

With that, they I interpret their worry as an increase with the upcoming UK CPI...
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