Trade Closed: 2007-07-17 07:32
Well, the market was expecting weak UK CPI data and what did we get? Strong data of course!
UK CPI headline came in at 2.4% versus 2.3%, and core came in at 2.0% versus 1.9%. The Retail Price Index also came in higher than expected at 4.4%.
1st half: +20 pips
2nd half: + 50 pips
Total: +70 pips
On a side note: I will hang out in the chatroom until 11:00 am EDT today. Come join me!
Trade Idea: 2007-07-17 00:27
Market expectations are for a lower read to bring inflation closer to the BOE target of 2.0%. If this is the case, we will probably see a drop in Cable as this pair has made a straight shot up, currently trading below the high of 2.0400. Profit taking will be in full effect. Of course, if inflation is still higher than what the Bank of England is looking for, then expectations of rates hiking to 6.00% will hold, and we may see a further rally in Cable.
If we see a weaker inflation number, then I will look for an opportunity to sell, but with a tight profit target as we would be trading against the trend. On strong inflation, I will look to buy with a break to the upside, also with a tight profit target as volatility may quickly subside. In either case, I will limit my trades to half the normal position size due to the potential volatility of today’s events.
Stay tuned for updates…Good luck and good trading!