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USD/JPY binary signal - U.S. CPI - 12 May 2017

Signal details
Entry Price: 
113.78
Close Price: 
113.28
Direction: 
Low
Expiry Time: 
20:00 GMT
Result: 
ITM
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The monthly consumer price index data from the U.S. is expected to be released today at 13:30 GMT. Economists polled are expecting the headline consumer prices to rise 0.3%. This would potentially reverse the 0.3% declines registered in March.

The core CPI, which excludes food and energy prices, is expected to rise 0.2%, reversing the 0.1% declines posted the month before. On a year over year basis, headline consumer prices are expected to rise 2.3% and core CPI is expected to rise 2% from a year ago.

A beat on the estimates on the consumer prices will be hawkish for the U.S. dollar as it would mark a return of inflationary pressures which will keep the Federal Reserve on path to tighten monetary policy further. The next rate hike is currently priced in for June.

Yesterday, the U.S. producer prices data showed an increase in April suggesting that price pressures may have firmed at the factory gate. Data from the U.S. Labor department showed that producer prices rose 0.5% from the previous month in April. The increase came on prices on services which contributed heavily to the gains which were broad based.

Compared to a year ago, the overall producer price index for the final demand was seen rising 2.5% which was the steepest climb since February 2012. The underlying figures showing core prices that exclude food and energy jumped 1.9% from a year ago, while the Labor department's measure that includes final demand less food, energy and trade services rose 2.1% from a year ago.

The USDJPY has been in a strong bullish trend over the last week and price closed bearish yesterday. This price action hints at a potential pullback in prices in the near term as we expect a short term retracement to the rally.

Therefore, for today's binary trading signal, the recommendation is for daily PUT options in USDJPY at 113.78 for a 20:00 GMT expiry time. The weakness in the U.S. dollar should potentially push USDJPY to close weaker today.

Disclaimer: The article is written for informative purposes only and it is not financial advice. The author does not have any position in the currency pairs mentioned, and no plans to initiate a position. He wrote the article himself and expressed his own opinions. He has no business nor personal relationships with any mentioned government entities or stocks. Readers should not treat any opinion expressed by the author as a specific inducement to make a particular trade or follow a particular strategy, but only as an expression of his opinion.