Todays Forex News in the U.S. is primarily the Consumer Price Index.

Will it move the markets? This is the question.

I find it difficult to believe that today the CPI will have much of an impact on the markets with the major news being the FOMC announcement tomorrow. We must be careful when reading charts before major news announcements. Many traders do not understand this concept, however veteran traders do. The bottom line is you must be very prudent when trading prior to major news announcements. Low volume is very typical before news announcements and large traders typically will not take a position before a direction is seen after the news announcement.

So what do we do trade or not trade?

This is a great question. If you read about some of the worlds finest traders, you will see Paul Tudor Jones says he never trades major NEWS announcements since he says "That's gambling". Very interesting quote coming from one of the finest traders of all time. I am sure many traders do well with news trading, however in our Forex Trading Room, we focus on trading on a technical basis, and less on news bits. We feel unless the news is a major key announcement Banks and large Hedge funds will sometimes use news announcements to take their positions, even if the position is contrary to what you may think fundamentally. So whats the bottom line....be prudent trying to judge today's CPI as a indicator of what the fed may do tomorrow. Here is some info below on today's announcements.

US CPI data will be released later today at 12:30 GMT

Total            M/M        Y/Y
Prior:         0.1%      0.2%
Expected:  0%       0.2%
Low:          -0.2%     0.1%
High:         0.2%      0.4%

Core

Prior:          0.1%      1.8%
Expected:  0.1%     1.9%
Low:             0%        1.8%
High:           0.2%    2.0%

CPI What is it?
US CPI measures the change in the price of goods and services purchased by consumers. US CPI is the most important inflation-related release due to its earliness and broad scope. This US CPI release is seasonally adjusted. Consumer prices account for a majority of overall inflation and inflation is important to currency valuation because rising prices lead the central bank to raise interest rates to contain inflation.

CPI Summary:
This is an important indication that can be used to justify a rate hike, however be prudent as the rate decision is a plethora of data the has accumulated over the last few months, and one day of data should not change direction of the FED.

What to Look For:

A weak CPI may convince some that we may see the FED hold off on rate hikes, since inflation would be subdued on a low number. A high CPI number should make some more concerned that the FED hike may be coming tomorrow.

Again I differ in opinion with most, since I don't have much of an opinion, after all you can't when most of your trades are very short term.

If your interested in following me on my thoughts for tomorrow's FOMC please join my twitter, to get some Forex News Trading ideas.

All the best in trading,

Gerard (BT)