Will US CPI Force a GBPUSD Breakout After UK CPI Couldn’t?
• Not all economic event risk is capable of moving the markets, and sometimes even high profile data falls short
• To be market moving, event risk requires: considerable importance; a 'surprise' factor and room to price
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What determines how market moving event risk can be? This past session, UK inflation figures offered up a significant surprise, but pairs like GBPUSD and GBPJPY failed to forced bullish breakouts. There are generally three factors that factor in to how market-moving event risk can and will be. First and foremost, is the fundamental spark important? In other words, does it have the scope to influence the largest possible segment of the market? Second - and the most obsessed-over aspect - is how significant the 'surprise' is. Finally, there is the consideration of how saturated a fundamental theme is. If a hawkish view is already extreme, what more could another indicator supporting hikes accomplish? How much more surprising would an update that is dovish be? We consider market moving potential in data with the UK CPI behind, US CPI ahead and the Summer trading lull in full swing in today's Strategy Video.
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