This is one of the most important economic releases for the currency markets, and not only, given the fact that equity markets and the overall markets react the most at anything that is related to inflation. And this is the favored measured move for inflation, hence high levels of volatility surround the release.
Usually central banks favor the Core cpi, as it shows the change in goods and services purchased by consumers, excluding food and energy, and the reason for this is that food and energy prices tend to be extremely volatile and they are distorting the real data. So while the CPI number includes food and energy, the Core CPI indicator is mostly watch by traders as it shows the real inflation levels in the economy. However, in the case of Canada, the Core CPI indicator shows the change in goods and services purchased by consumers, excluding the 8 months volatile items, so it’s a bit different than the one in the United States.
Inflation is important for traders because rising prices lead to central banks to increase interest rates, and this translates in higher volatility levels in markets.
The most important things to take into consideration when looking at the Core CPI indicator in Canada are the following:
- Release date: monthly, about 20 days after month ends;
- release time: 12:30 GMT during North American trading session;
- first tier data;
- shows inflation levels = extremely important for currency trading!!!