Forex Signals – Forex Signals Brief for Apr 12: US CPI on Watch
US equity markets ended the week higher while the Greenback continues to drift downwards.
Last week lacked any major data points and markets broadly speaking are just grinding at the moment.
Over the weekend, we saw another strong performance from the crypto space with BTC leading the charge and climbing above the $60,000 mark.
The Data Agenda
We have a few top-tier data points this week, lead by US CPI and Retail Sales.
CPI is a very interesting data point in my eyes and it is clearly one of the most manipulated. Back in the 80s, the way in which CPI was calculated was very different from today.
Previously CPI used to represent the cost or change in the cost of a basket of goods. That was a realistic measure of inflation. At some point in the 80’s and 90’s these measures got adjusted, so that goods could be ‘exchanged’ for something cheaper. So maybe the cost of a burger was too high, the CPI would assume a consumer might that for something equivalent but cheaper, but not quite the same.
While that makes sense, that is clearly manipulating the CPI measure. Why would a Government want to manipulate CPI?
Governments increase social security benefits in line with CPI. If CPI is just 1-3% then that is a pretty big saving.
The real CPI, if measured by the old system, would show that CPI is closer to 7-10% annually. If that was public information, just imagine the implications. Bond investors would require higher yields, social security benefits would ballon. No wonder CPI is suppressed. Similarly, it allows central banks to keep printing money, simply to boost CPI, which is begin suppressed.
So if you wonder why the cost of living and the quality of life falls each year, there’s one answer.
When we see this week’s CPI print come out at 2.5%, we should assume the real inflation rate is closer to 7%.
Forex Signal Update
The FX Leaders Team hit 10 winners from 14 trades last week for a 71% strike rate for a solid performance from the guys..
We have four open signals so look to the forex signals page for all the latest developments.
GBP/USD – Watching
We are short the GBP/USD as price is testing the 1.37 level and looking very weak.
Gold – Active Signal
GOLD looked to have broken above the $1740 level, before price retraced. We continue to hear many stories of tight bullion supply, so I fully expect to see more upside ahead.
BTC broke back above the $60,000 level over the weekend and it continues to battle that level today.
XRP was once again the big mover and it tagged $1.50, before retreating back to the $1.35 region. We have also seen BNB on a real tear in recent days.
We are clearly in the midst of another bull run in the crypto space so I expect a big few months ahead.