This market commentary and analysis has been prepared for ATFX by a third party for general information purposes only. You should therefore seek independent advice before making any investment decisions. This information has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. On the other hand, lower inflation can result in reduced interest rates and weaker currency demand, encouraging consumer spending, increasing money circulation, and stimulating a sluggish economy.

Piotroski F-Score Strategy: Backtest and Performance Analysis

1. While the CPI doesn’t directly influence stock prices, it plays a crucial role in shaping consumer behavior, corporate profitability, and central bank decisions.
2. The metro data is subject to wider fluctuations and is useful mainly to identify price changes based on local conditions.
3. Let’s look at three historical examples to try to understand how inflation might impact markets.
4. These case studies highlight how crucial it is for forex traders to monitor CPI releases closely.
5. Whether looking to trade each release or simply factoring it into your broader trading strategy, the importance of the Consumer Price Index to the financial markets cannot be denied.
6. Whether you are trading currencies, stocks, or commodities, staying informed about CPI trends can give you a competitive edge.

This basket includes categories such as food and beverages, housing, apparel, transportation, medical care, recreation, education and communication, and other goods and services. The BLS periodically updates the market basket to reflect changes in consumer spending habits. The dramatic increase in the price of everyday goods and services affects everyone. This guide aims to help make informed decisions when trading data related to inflation. Forex strategists often compare current CPI data with past records and market expectations.

Some financial experts and commentators, however, disagree with this approach, as it is difficult to envision a comprehensive basket of goods and services without including Food and Fuel items. The calculation of the Consumer Price Index differs from that of the Core CPI in that the latter measure omits the Food and Fuel categories. Excluding these two categories can help provide a clearer representation of the CPI’s dynamics. “We remain positive and believe top 10 forex trading apps for 2024 the S&P 500 can rally more than its long-term average over the coming year,” Colas wrote. “The setup going into 2025 more closely resembles exceptionally strong years rather than weak ones. We therefore expect the S&P 500 to gain around 15 percent in 2025, ending the year at 6,840 based on Thursday’s close.”

CPI news trading strategy #2 – trading rules (the days after the release)

Investors can use fundamental analysis to benefit from CPI movements by examining the underlying factors that influence inflation, such as economic growth, interest rates, and government policies. They can also analyze the financial health of companies and industries to identify those that may be more resilient to inflationary pressures and have pricing power, or the ability to pass on increased costs to consumers. For example, companies with huge debt will likely suffer when CPI consistently increases. The CPI is widely used by financial market participants to gauge inflation and by the Federal Reserve to calibrate its monetary policy. Businesses and consumers also use the CPI to make informed economic decisions.

When you’re ready, switch to the live account and start trading for real. The Consumer Price Index (CPI) is generally published monthly, although some countries opt to release the data quarterly. “The most important issue for anyone invested in the US equity market is the stability of the US economy in 2025,” Colas wrote. This brings Colas to what he sees as the true takeaway from Wall Street’s recent bullish calls — it’s more about the direction of the market than the actual projection strategists slap on the S&P 500. And Colas largely agrees with the upside many have been pointing to for next year. Wall Street research firms are beginning to issue 2025 outlooks for the equity market.

While inflation concerns did play a role, gold’s strong performance in the 2000s resulted from a combination of factors like geopolitics, central bank demand, and financial innovation. The financial markets are complex, with many interrelated forces driving prices up or down. It’s important to keep the global context in mind while keeping an eye on CPI numbers. While CPI is a backward-looking indicator, its implications on inflation and central bank policy can help forex traders anticipate future market trends.

What CPI means for investors and traders

In corporate news, quarterly results from Zoom (ZM), Dell (DELL), Best Buy (BBY), CrowdStrike (CRWD), and Macy’s (M) are likely to catch investor attention. Please bear with us as we address this and restore your personalized lists. IG is a trading name of IG Markets Limited and IG Markets South Africa Limited. IG Markets South Africa Limited offers domestic accounts and IG Markets Limited offers international accounts. Any information contained in this site’s articles is based on the authors’ personal opinion.

Higher inflation, indicated by an increase in CPI, reduces the value of an individual currency unit, as more units are required to purchase a particular item. Moreover, changes in the How to buy ens CPI can influence central bank monetary policies. A higher CPI may prompt a central bank to raise interest rates to control inflation, which generally leads to a stronger currency as its demand increases. In April 2019, the United States CPI was 2.0%, exceeding market expectations by 0.1%. As a result, the AUD/USD pair initiated a new downtrend, pushing the Australian Dollar down to a psychological support level of $0.6900 in the coming weeks. Although the CPI inflation can significantly impact price fluctuations, it should not be considered an isolated indicator of price changes.

The index is calculated and published monthly by the Bureau of Labor Statistics. It is a common measure of inflation, indicating the health and direction of the economy. It also serves in other capacities, notably to help make adjustments to certain income payments, such as Social Security and pensions for federal civil service retirees. Since gold is sometimes viewed as an inflation hedge, a rising CPI might lead to an increase in demand for the metal. On the other hand, inflation can impact oil prices through monetary policy changes as well as higher production costs.

The data provided helps the BLS determine price changes compared to the previous period. This information has been prepared by IG, a trading name of IG Markets Ltd and IG Markets South Africa Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy atfx broker review or completeness of this information.