A1 Trading Company

January 15, 2024

More CPI Trade Setups This Week

Frank Cabibi

Canada and the UK are set to report CPI news on Tuesday and Wednesday respectively. Expectations are lower for both countries. Here are some more trade setups to look at going into another week of inflation reports.

EdgeFinder Analysis

CADCHF is unchanged at -5 bearish score for today. The score that is most likely going to change this week is in the inflation category. If CPI comes in lower as expected, the score category will be negatively impacted.

This month is historically a bearish month for the pair as it tends to decline 1.2% on a ten year average. COT data and labor are propping up the score right now and are the only factors keeping it from becoming a stronger bearish reading.

Gold is still mixed as it hovers around the falling trend line in a wedge pattern. Price needs to close above the wedge on the 1D timeframe in order to appear bullish. However, the two rejections on the daily candles is suggesting that price might not be ready to move higher.

COT also reported to have been net short gold this week while the dollar was slightly long. There is not much news for the USD this week besides retail sales on Wednesday, but that will likely not affect the gold spot.

EURGBP is one pair to consider this week as we go into UK CPI. The change from last week to now saw a considerable jump in the trend reading which is now at +4. However, something to notice is that not many categories are showing a reading.

Retail, economy, and interest rates are 0, and nothing changed except the trend reading today. If GBP sees a higher CPI, it will likely turn the score back to neutral. But a lower CPI would reinforce the bullish thesis on EURGBP.

Retail Spotlight

Retail is mostly short CHF and long oil. Gold is still neutral while GBP looks to be shorted by the crowd.

Smart Money Spotlight

COT showed a bullish change on the indices with the exception of NAS100. CAD was bought as well as AUD, GBP and JPY. The strongest bear positions are JP225 and two metals.

Fundamental Spotlight

The current scores on inflation between the two countries reporting this week is -1. This will provide a visual of what could happen if both numbers come out lower (as expected). The two moves will cancel each other out as it suggests weakness in both currencies. Higher CPI in the UK paired with lower CPI in Canada will make the inflation score move higher. Lower CPI in the UK and higher CPI in Canada will result in a more negative score and suggest weakness in the pound.

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