UK Consumer Price Index In Focus
Algorithmic trading has its upsides and downsides. The events last trading week, might well have been caused by Algorithmic Trading, as Market Analysts have indicated, specifically the strategy of risk parity. This simply means using levels of risk to allocate funds within a particular portfolio, rather than allocating certain percentages to asset classes such as bonds and stocks, as is the usual practice with traditional stock trading.
Using the Asian Stocks for instance, as the volatility in Japanese Equities increased last week, users of this strategy automatically shorted stocks to balance off risk in their portfolios. Asian and Global Equities generally nosedived, allegedly caused by the above-mentioned algorithm strategy. We however, will not fail to take into account, Investors’ cautionary attitude, given rising borrowing costs and soaring volatility. Investors await key economic numbers which will be released this week, as economic data from major economies came in mixed last week. Focus will be on GBPUSD due to the UK CPI Data due for release today. See price action review for GBPUSD last week in image below.
Potential Catalysts Today
09:30 AM GMT UK CPI (YoY) (Jan)
11:50 PM GMT Japan GDP (QoQ) (Q4)
07:45 AM GMT French Non-Farm Payrolls (QoQ) (Q4)
08:15 AM GMT Swiss PPI (MoM) (Jan)
09:00 AM GMT US IEA Monthly Report
09:30 AM GMT UK PPI Input (MoM) (Jan)
11:30 AM GMT Australia Westpac Consumer Sentiment (Feb)
Investment Word of The Day – Consumer Price Index (CPI)
Consumer Price Index (CPI) measures the change in the price of goods and services such as transportation, food and medical care, from the consumer’s perspective. Used mainly to identify periods of Inflation or Deflation, changes in the CPI are used to assess price changes associated with the cost of living.