By Darrell Martin
Friday, May 18, 2018, at 8:30 AM ET, Statistics Canada will release nine reports related to Retail Sales and Consumer Price Index. These same reports are issued each month and have the ability to affect the markets causing movement, which offers trading opportunities.
The Consumer Price Index (CPI) is a measurement in the change in the price of goods and services taken from the perspective of the consumer. It is indicative of the fluctuation in purchasing trends and inflation. The different reports may exclude certain items, such as food and energy, be about similar price variations, or compare year over year (YoY) or month over month (MoM).
Retail Sales shows the change in the total value of inflation-adjusted sales at the retail level. As such, it is a valuable indicator of consumer spending and the overall economic activity in Canada.
For all of these reports, if the reading is higher than expected, it should be taken as positive or bullish for the CAD, while a lower than expected reading would be regarded as negative or bearish for the CAD.
This type of news offers trading opportunities using an Iron Condor strategy since movement is predicted, but direction is unknown. To set up this trade, look for two Nadex USD/CAD spreads. Simultaneously, one is bought below the market while another spread is sold above the market.
The ceiling of the bought spread should meet the floor of the sold spread and be where the market is trading at the time of entry. This allows the market plenty of room to move and pullback to make a potential profit.
Enter as early as 8:00 AM ET using 10:00 AM ET expiration contracts. The minimum profit is $30, with at least $15 of profit potential on each spread.
Using the Apex Investing spread scanner makes it easy to find the spreads for the potential trade. If the parameters of the trade cannot be met, there is no trade. Never force a trade. The image below illustrates profit potential on the scanner for USD/CAD spreads.
Remember, when trading with Nadex spreads, risk and profit is capped at the top and bottom of the range of the spread. The risk and reward are always known up front before any trade contract is entered.
To learn more about trading the news, visit Apex Investing.
