US CPI - Core [m/m]
The US consumer price index is used as an indicator of inflation in the country. The core CPI index is especially popular; it is corrected for seasonal and volatile fluctuations. It is used by the FRS in its decisions.
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How to trade US CPI - Core [m/m]
If the data is published above the forecast, USDJPY grows.
Core index excludes the price fluctuations of energy carriers and food as volatile variables, which gives the market a smoother and more accurate picture of the overall inflationary background in the country.
The consumer price index is certainly used to estimate inflation. As a rule, the central bank (in this case this is the Federal Reserve System) has its own inflation targeting. The inflation targeting helps the bank to assess the situation and take actions to achieve it, if necessary. 2% for the FRS is the traditional inflation targeting.
If the inflation is weak and is below the targeting level, as a rule, measures are taken to stimulate the economy, the printing press is turned on, and the interest rate is reduced. If inflation is high, everything happens on the contrary: the rate is raised, and the amount of the money supply must be reduced, thereby increasing the value of money in circulation.
At some points, when the FRS is particularly close to the moment of changing its interest rate (and, as a rule, the press constantly informs about it), we can use excessively low trading triggers since the market's interest in the indicator is especially high. Monitor the fundamental background and market sentiments before the release.
Pay attention that the schedule of the indicator's release is such that CoreCPI can be published simultaneously with the American retail sales. In this case, both indicators should be accepted for trading, as there can be a conflict between them. As a rule, a conflict prevention system is used in such cases, it takes both values, checks for a conflict, and then issues a weighted trading signal.
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