Trading News Events

- Canada Consumer Price Index to Increase for Second Straight Month
- Inflation Print of 1.3% Would Match the Highest Reading for 2013

Trading the News: Canada Consumer Price Index

A sharp rebound in Canada’s Consumer Price Index may spur a near-term correction in the Canadian dollar as it limits the risk for disinflation.

What’s Expected:

Time of release: 01/24/2014 13:30 GMT, 8:30 EST
Primary Pair Impact: USDCAD
Expected: 1.3%
Previous: 0.9%
DailyFX Forecast: 1.0% to 1.3%

Why Is This Event Important:

It seems as though the Bank of Canada (BoC) may revert back toits easing cycle as the persistent slack in the real economy continues to drag on growth and inflation, and Governor Stephen Poloz may continue to talk up bets for lower borrowing costs in an effort to encourage a ‘soft-landing’ for the Canadian economy.

Expectations: Bullish Argument/Scenario

Release	Expected	Actual
Retail Sales (MoM) (NOV)	0.2%	0.6%
Manufacturing Sales (MoM) (NOV)	0.3%	1.0%
Business Outlook Future Sales (4Q)	20.00	29.00

The pickup in private sector consumption may prompt a marked rebound in price growth, and a strong inflation print may spur a more meaningful recovery in the Canadian dollar as market participants scale back bets for a rate cut.

Risk: Bearish Argument/Scenario

Release	Expected	Actual
Net Change in Employment (DEC)	14.1K	-45.9K
Building Permits (MoM) (NOV)	-2.7%	-6.7%
Ivey Purchasing Manager Index s.a. (DEC)	54.5	46.3

Nevertheless, firms may continue to conduct heavy discounting amid the persistent slack in the real economy, and a dismal CPI print may spur fresh highs in the USDCAD as the BoC adopts a more dovish tone for monetary policy.

How To Trade This Event Risk

Bullish CAD Trade: Canada Inflation Climbs to 1.3% or Higher

• Need red, five-minute candle after the CPI report to consider short USDCAD entry
• If the market reaction favors a long Canadian dollar trade, establish short with two position
• Set stop at the near-by swing low/reasonable distance from cost; use at least 1:1 risk-to-reward
• Move stop to entry on remaining position once initial target is hit, set reasonable limit

Bbearish CAD Trade: Canada Consumer Prices Disappoint

• Need green, five-minute candle following the release to look at a long USDCAD trade
• Carry out the same setup as the bearish CAD trade, just in the opposite direction

Potential Price Targets For The Release
USDCAD Daily

• At Risk for Correction Following Higher High- Lower High on Horizon
• To Face Larger Pullback Once RSI Falls Back from Overbought
• Interim Resistance: 1.1172 Pivot to 1.1200 Pivot
• Interim Support: 1.0900 Pivot to 1.0930 (61.8% expansion)

Impact that the Canada Consumer Price report has had on CAD during the last month

Period	Data Released	Survey	Actual	Pips Change (1 Hour post event )	Pips Change (End of Day post event)
NOV 2013	12/20/2013 13:30 GMT	1.0%	0.9%	+26	-29

November 2013 Canada Consumer Price Index

CPI data out of Canada for the month of November disappointed by a tenth of a percent and sent USD/CAD spiking to multi-year highs, but the pair failed to hold gains as the trading week came to a close. Since then, we have seen severe CAD weakness and Thursday prompted further multi-year lows, but USD weakness across the board and better than expected Retail Sales data out of Canada halted further moves to the upside. At the Bank of Canada Rate Decision on Wednesday, Gov. Poloz outlined risks of lower inflation and a meet or beat of CAD CPI on Friday could be that fundamental factor spur a USD/CAD correction. That being said, misses in expectations over the past few weeks have prompted huge moves to the upside for USD/CAD and disappointments have hardly yielded a meaningful correction.

--- Written by David Song, Currency Analyst

More...

- U.K. GDP to Expand for Fourth Consecutive Quarter
- 0.8% Growth Rate Remains the Highest Print for 2013

Trading the News: U.K. Gross Domestic Product

The U.K. economy is expected to grow another 0.7% in the fourth-quarter, and a marked pickup in 4Q GDP may spark fresh highs in the British Pound as it puts increased pressure on the Bank of England (BoE) to normalize monetary policy ahead of schedule.

What’s Expected:

Time of release: 01/28/2014 9:30 GMT, 4:30 EST
Primary Pair Impact: GBPUSD
Expected: 0.7%
Previous: 0.8%
DailyFX Forecast: 0.7% to 1.0%

Why Is This Event Important:

Indeed, there’s growing bets that the BoE will implement a dovish twist to its forward-guidance as the unemployment rate quickly approaches the 7% threshold, but Governor Mark Carney may adopt a more hawkish tone for monetary policy amid the stronger-than-expected recovery in the U.K.

Expectations: Bullish Argument/Scenario

Release	Expected	Actual
ILO Unemployment Rate (3M) (NOV)	7.3%	7.1%
Retails Sales ex Auto (MoM) (DEC)	0.3%	2.8%
Mortgage Approvals (NOV)	69.7K	70.8K

The ongoing improvement in the labor market paired with the resilience in private-sector consumption may spur a strong 4Q GDP print, and a positive development should spur a bullish reaction in the GBPUSD as the central bank moves away from its easing cycle.

Risk: Bearish Argument/Scenario

Release	Expected	Actual
Industrial Production (MoM) (NOV)	0.4%	0.0%
Manufacturing Production (MoM) (NOV)	0.4%	0.0%
Trade Balance (NOV)	-2.300K	-3.238K

However, the widening trade deficit along with the slowdown in business outputs may drag on the growth rate, and a dismal GDP figure may generate a larger correction in the pound-dollar as market participants weigh the outlook for monetary policy.

How To Trade This Event Risk

Bullish GBP Trade: 4Q GDP Climbs 0.7% or Greater

• Need green, five-minute candle following the GDP print to consider a long British Pound trade
• If reaction favors a buy trade, long GBPUSD with two separate position
• Set stop at the near-by swing low/reasonable distance from entry; look for at least 1:1 risk-to-reward
• Move stop to entry on remaining position once initial target is hit, set reasonable limit

Bearish GBP Trade: U.K. Growth Rate Misses Market Forecast

• Need red, five-minute candle to favor a short GBPUSD trade
• Implement same setup as the bullish British Pound trade, just in the opposite direction

Potential Price Targets For The Release
GBPUSD Daily

• Remains Bullish Above 1.6300 (Higher Low); Searching for Higher High
• Price & Relative Strength Index Retain Bullish Trend From July
• Interim Resistance: 1.6700 Pivot to 1.6730 (100.0 expansion)
• Interim Support: 1.6300 Pivot to 1.6310 (50.0 expansion)

Impact that the U.K. GDP report has had on GBP during the last quarter

Period	Data Released	Estimate	Actual	Pips Change (1 Hour post event )	Pips Change (End of Day post event)
3Q A 2013	10/25/2013 8:30 GMT	0.8%	0.8%	+21	-37

3Q A 2013 U.K. Gross Domestic Product

The advance 3Q GDP print out of the U.K. came in in line with expectations, prompting an initial spike in Pound strength. Nevertheless, USD saw a slight comeback as the trading week came to a close. With U.K. growth expectations only having strengthened since then, this release will be closely watched with estimates pointing to a YoY growth rate not seen since 2008, although market participants may pare back bets ahead of the FOMC on Wednesday.

--- Written by David Song, Currency Analyst

More...

- Federal Open Market Committee (FOMC) to Taper Another $10B
- Ben Bernanke Attends Last Meeting as Fed Chairman

Trading the News: Federal Open Market Committee Meeting

The Federal Open Market Committee (FOMC) is widely expected to reduce its asset-purchase by another $10B as the benefits of quantitative easing now outweighs the costs, and the policy outlook may prop up the dollar in February as the central bank moves away from its easing cycle.

What’s Expected:

Time of release: 01/29/2014 19:00 GMT, 14:00 EST
Primary Pair Impact: EURUSD
Expected: $65B
Previous: $75B
DailyFX Forecast: $65B

Why Is This Event Important:

However, we may see a growing number of Fed officials favor a less-aggressive approach in normalizing monetary policy amid the spillover-effects to the global economy, and a material shift in central bank rhetoric may undermine the bullish sentiment surrounding the dollar if the FOMC implements a dovish twist to its forward-guidance.

Expectations: Bullish Argument/Scenario

Release	Expected	Actual
Advance Retail Sales (MoM) (DEC)	0.1%	0.2%
Unemployment Rate (DEC)	7.0%	6.7%
Gross Domestic Product (Annualized) (QoQ) (2Q F)	3.6%	4.1%

The Fed may adopt a more neutral tone for monetary policy as the central bank anticipates a stronger recovery in 2014, and we may see a bullish reaction in the dollar should the committee lay out a more detailed exit strategy.

Risk: Bearish Argument/Scenario

Release	Expected	Actual
U. of Michigan Confidence (JAN P)	83.5	80.4
Average Hourly Earnings (YoY) (DEC)	1.9%	1.8%
Personal Income (NOV)	0.5%	0.2%

Nevertheless, the FOMC may implement a wait-and-see approach amid the uncertainties surrounding the world economy, and the greenback may face a further decline over the near-term if the central bank shows a greater willingness to retain its highly accommodative policy stance for an extended period of time.

How To Trade This Event Risk

Bullish USD Trade: FOMC Delivers Another $10B Taper & Pledges to Stay on Course

• Need red, five-minute candle following the print to consider a short EURUSD trade
• If market reaction favors a long dollar trade, short EURUSD with two separate position
• Place stop at the near-by swing high/reasonable distance from entry; look for at least 1:1 risk-to-reward
• Move stop to entry on remaining position once initial target is hit, set reasonable limit

Bearish USD Trade: Fed Keeps QE at $75B; Sees Further Delay in Exit Strategy

• Need green, five-minute candle to favor a long EURUSD trade
• Implement same setup as the bullish dollar trade, just in opposite direction

Potential Price Targets For The Rate Decision
EURUSD Daily

• Downward Trend Taking Shape Amid Failure to Close Above 1.3800
• Bearish Divergence in Relative Strength Index Favors Downside Targets
• Interim Resistance: 1.3800 (100.0 expansion) to 1.3830 (61.8 retracement)
• Interim Support: 1.3490 (50.0% retracement) to 1.3530 (61.8% expansion)

Impact that the FOMC Interest Rate Decision has had on EUR/USD during the last release

Period	Data Released	Estimate	Actual	Pips Change (1 Hour post event )	Pips Change (End of Day post event)
Dec 2013	12/18/2013 19:00 GMT	0.25%	0.25%	-30	-133

December 2013 Federal Open Market Committee Interest Rate Decision



Despite many market participants calling for the first taper of the Fed’s asset purchase program in March, the FOMC came out with a $10B taper split evenly between Treasury and MBS purchases. The surprise sent USD pairs whipsawing to the up and downside before finally ending in USD strength against the majors. Moving into Wednesday’s January FOMC meeting, it is important to note that the USDollar index is just slightly below where we were at the daily close of the last FOMC day. This is a critical juncture for global markets with emerging market currencies selling off with equities over the past week. If we are to see another $10B taper as expected, extreme volatility and USD strength cannot be ruled out. If the recent selloff and last NFP report force the Fed’s hand and lead the FOMC to delay a January/February taper, the greenback will certainly falter on the back of a dovish Fed decision. Note: there is no February meeting and this will be the last rate decision out of the Fed until March 19th.

--- Written by David Song, Currency Analyst

More...

- Reserve Bank of New Zealand to Retain Current Policy; Warn of Rate Hikes in 2014
- Will RBNZ Governor Stephen Poloz Lay Out More Detailed Exit Strategy?

Trading the News: Reserve Bank of New Zealand Interest Rate Decision

The Reserve Bank of New Zealand (RBNZ) is widely expected to keep the benchmark interest rate at 2.50%, but the policy statement may highlight a bullish outlook for the NZDUSD as the central bank is widely expected to normalize monetary policy this year.

What’s Expected:

Time of release: 01/29/2014 20:00 GMT, 15:00 EST
Primary Pair Impact: NZDUSD
Expected: 2.50%
Previous: 2.50%
DailyFX Forecast: 2.50%

Why Is This Event Important:

Indeed, RBNZ Governor Graeme Wheeler may unveil a more detailed exit strategy this time around amid the growing threat of an asset-bubble, and bets for an imminent rate hike may spur fresh highs in the New Zealand dollar as market participants weigh the prospects for future policy.

Expectations: Bullish Argument/Scenario

Release	Expected	Actual
Consumer Price Index (YoY) (4Q)	1.5%	1.6%
Gross Domestic Product s.a. (QoQ) (3Q)	1.1%	1.4%
Employment Change (QoQ) (3Q)	0.5%	1.2%

The RBNZ may adopt a more hawkish tone for monetary policy as the pickup in growth and inflation raises the threat of a housing-bubble, and the fresh batch of central bank rhetoric may prop up the NZD should Governor Wheeler show a greater willingness to raise rates sooner rather than later.

Risk: Bearish Argument/Scenario

Release	Expected	Actual
BoP Current Account Balance (3Q)	-4.600B	-4.780B
Retail Sales ex Inflation (QoQ) (3Q)	0.9%	0.3%
Private Wages ex Overtime (QoQ) (3Q)	0.5%	0.4%

Nevertheless, the RBNZ may retain a wait-and-see approach amid the slowdown in the Asia-Pacific region, and the kiwi may trade heavy next month should the central bank adopt a more neutral tone for monetary policy.

How To Trade This Event Risk

Bullish NZD Trade: RBNZ Offers More Detailed Exit Strategy

• Need green, five-minute candle following a hawkish statement to consider a long NZDUSD trade
• If market reaction favors a long trade, buy NZDUSD with two separate position
• Set stop at the near-by swing low/reasonable distance from cost; look for at least 1:1 risk-to-reward
• Move stop to entry on remaining position once initial target is met, set reasonable limit

Bearish NZD Trade: Wheeler Scales Back Hawkish Tone & Strengthens Verbal Intervention

• Need red, five-minute candle to favor a short NZDUSD trade
• Implement same strategy as the bullish New Zealand dollar trade, just in opposite direction

Potential Price Targets For The Rate Decision

• Appears to Be Carving Higher Low Around 0.8200 Handle- Higher High on Tap?
• Relative Strength Index Breaks Out; Retains Bullish Trend from May 2013
• Interim resistance: 0.8430 (23.6% retracement) to 0.8440 (78.6% retracement)
• Interim support: 0.8100 Pivot to 0.8130 (50.0% retracement)

Impact that the RBNZ Interest Rate Decision has had on NZD during the last meeting

Period	Data Released	Estimate	Actual	Pips Change (1 Hour post event )	Pips Change (End of Day post event)
DEC 2013	12/11/2014 20:00 GMT	2.50%	2.50%	+24	flat

December 2013 Reserve Bank of New Zealand Interest Rate Decision



The Kiwi saw a move to the upside at the December RBNZ meeting as Wheeler hinted that rate increases would occur in the future in order to maintain price levels. Wheeler said that he was ‘serious’ about containing inflation while noting once more that the Kiwi exchange rate remains high. Although at the December meeting we saw the Kiwi remain flat at the end of the day, with the FOMC rate decision at 19:00GMT we are likely to see much more volatility. Comments on future rate hikes and inflation data out of New Zealand will remain key moving forward.

--- Written by David Song, Currency Analyst

More...

- NZ Employment to Rise 0.6%, Jobless Rate to Slip to 6.0% (Lowest Since 2Q 2009)
- Job Growth has Topped Market Forecast During the Last Three-Straight Quarter

Trading the News: New Zealand Employment Change

Job growth in New Zealand is expected to expand another 0.6% during the third-quarter, and a marked pickup in employment may spark a near-term rally in the NZDUSD as it puts increased pressure on the Reserve Bank of New Zealand (RBNZ) to normalize monetary policy.

What’s Expected:

Time of release: 02/04/2014 21:45 GMT, 16:45 EST
Primary Pair Impact: NZDUSD
Expected: 0.6%
Previous: 1.2%
DailyFX Forecast: 0.6% to 1.0%

Why Is This Event Important:

There’s growing bets that the RBNZ will raise the benchmark interest rate at the March 12 meeting as the region faces a heightening risk for an asset-bubble, and Governor Graeme Wheeler may introduce a series of rate hikes in 2014 as the economic recovery continues to gather pace.

Expectations: Bullish Argument/Scenario

Release	Expected	Actual
Trade Balance (DEC)	500M	523M
Building Permits (MoM) (DEC)	-5.0%	7.6%
Gross Domestic Product s.a. (QoQ) (3Q)	1.1%	1.4%

The stronger-than-expected recovery along with the ongoing pickup in housing may prompt another marked increase in job growth, and a positive print may help the NZDUSD to retrace the decline from the previous month as it raises the scope of seeing higher borrowing costs in the New Zealand economy.

Risk: Bearish Argument/Scenario

Release	Expected	Actual
ANZ Job Advertisements (MoM) (DEC)	--	-0.7%
Consumer Price Index (YoY) (4Q)	1.5%	1.6%
Retail Sales ex Inflation (QoQ) (3Q)	0.9%	0.3%

Nevertheless, higher costs paired with the slowdown in private consumption may drag on hiring, and a dismal print may trigger further declines in the exchange rate as market participants scale back bets of seeing a rate hike over the coming months.

How To Trade This Event Risk

Bullish NZD Trade: Employment Rises 0.6% or Greater

• Need green, five-minute candle following the release for a potential bullish NZDUSD trade
• If market reaction favors a long trade, buy NZDUSD with two separate position
• Set stop at the near-by swing low/reasonable distance from entry; need at least 1:1 risk-to-reward
• Move stop to breakeven on remaining position once initial target is met, set reasonable limit

Bearish NZD Trade: New Zealand Job Growth Disappoints

• Need red, five-minute candle to consider a short New Zealand dollar position
• Carry out the same setup as the bullish NZDUSD trade, just in the opposite direction

Potential Price Targets For The Release
NZDUSD Daily

• Retains Upward Trend from 2009; Bullish RSI Break Highlights Topside Targets
• Interim Resistance: 0.8430 (23.6% retracement) to 0.8465 (38.2% expansion)
• Interim Support: 0.8030 (61.8% retracement) to 0.8050 Pivot

Impact that New Zealand Employment has had on NZD During the Last Release

Period	Data Released	Estimate	Actual	Pips Change (1 Hour post event )	Pips Change (End of Day post event)
3Q 2013	11/05/2013 21:45 GMT	0.5%	1.2%	+33	+48

3Q 2013 New Zealand Employment



New Zealand Employment increased another 1.2% in the second-quarter, with the jobless rate narrowing to 6.2% from 6.4%, and the stronger-than-expected recovery may lead the RBNZ to adopt a more hawkish tone for monetary policy as it raises the threat of an asset-bubble. The New Zealand dollar tracked higher following the print, with the NZDUSD climbing above the 0.8350 region, and the higher-yielding currency continued to gain ground throughout the day as the pair closed at 0.8575.

--- Written by David Song, Currency Analyst

More...

- Broad Views Surrounding European Central Bank (ECB)- Are They Priced-In?
- President Mario Draghi to Implement Verbal Intervention?

Trading the News: European Central Bank Interest Rate Decision

According to a Bloomberg News survey, 62 of the 66 economists polled see the European Central Bank (ECB) largely maintaining its current policy this month, but the broad range of expectations (rate cut, negative deposit rates, verbal intervention, non-standard measures) may produce increased volatility around the event as market participants weigh the outlook for monetary policy.

What’s Expected:

Time of release: 02/06/2014 12:45 GMT, 7:45 EST
Primary Pair Impact: EURUSD
Expected: 0.25%
Previous: 0.25%
DailyFX Forecast: 0.25%

Why Is This Event Important:

Indeed, the ECB remains poised to further embark on its easing cycle amid the heightening threat for deflation, while central bank President Mario Draghi may look to verbally weaken the single currency in an effort to further insulate the monetary union.

Expectations: Bearish Argument/Scenario

Release	Expected	Actual
Euro-Zone Retail Sales (MoM) (DEC)	-0.7%	-1.6%
Euro-Zone Producer Price Index (YoY) (JAN A)	-0.8%	-0.8%
Euro-Zone Consumer Price Index (YoY) (JAN A)	0.9%	0.7%

Subdue growth and inflation certainly raises the risk of seeing the ECB surprise with more easing, but even a further willingness to implement additional monetary support could be enough to spark a sharp selloff in the EURUSD amid the protracted recovery in the euro-area.

Risk: Bullish Argument/Scenario

Release	Expected	Actual
Euro-Zone ZEW Survey- Expectations (JAN)	--	73.3
Euro-Zone Trade Balance s.a. (NOV)	1.4%	1.8%
Euro-Zone Industrial Production s.a. (MoM) (NOV)	1.4%	1.8%

Nevertheless, the ECB may merely stress a more dovish twist to its forward-guidance as there appears to be a growing rift with the Governing Council, and a neutral policy stance may help the euro to sustain a larger rebound as market participants delay their bets for more easing.

How To Trade This Event Risk

Trading the ECB interest rate decision may not be as clear cut as some of our other trade setups as the press conference with President Draghi ends with a Q&A session

Bearish EUR Trade: ECB Loosens Policy and/or Publishes Detailed Easing Timeline

• Need red, five-minute candle following the decision/statement to consider a short Euro trade
• If market reaction favors a short trade, sell EURUSD with two separate position
• Set stop at the near-by swing high/reasonable distance from cost; at least 1:1 risk-to-reward
• Move stop to entry on remaining position once initial target is met, set reasonable limit

Bullish EUR Trade: Governing Council Highlights Neutral Policy

• Need green, five-minute candle to favor a long EURUSD trade
• Implement same strategy as the bearish euro trade, just in the opposite direction

Potential Price Targets For The Rate Decision

EURUSD Daily

• Descending Channel within Bearish Trend from 2008; Nov. Low (1.3294) in Focus
• Bearish Relative Strength Index Continues to Favor Downside Target
• Interim Resistance: 1.3800 (100.0 expansion) to 1.3830 (61.8 retracement)
• Interim Support: 1.3450 (38.2% retracement) to 1.3460 (50.0% expansion)

Impact that the European Central Bank Interest Rate Decision has had on EUR during the last meeting

Period	Data Released	Estimate	Actual	Pips Change (1 Hour post event )	Pips Change (End of Day post event)
JAN 2014	01/09/2014 12:45 GMT	0.25%	0.25%	+22	+5

EURUSD M5 : 15 pips price movement by EUR - Interest Rate news event :

EURUSD M5 : 146 pips price movement by EUR - Interest Rate :

Although the Euro was well supported following the January rate decision, Draghi’s presser at 13:30GMT led to a weaker Euro in the afternoon session and the EUR/USD pair closed out almost flat at the daily close. Mr. Draghi put forth revised ECB forecasts for GDP and inflation and noted that the Euro Area may face a prolonged period of low inflation. It is possible that at this meeting we will see strong comments, and possibly some sort of verbal intervention, on the back of weaker than expected CPI readings out of Germany last week. The ECB is likely wary of continued disinflation in Europe’s strongest economy and the central bank may feel the need to finally take some sort of action.



--- Written by David Song, Currency Analyst and Gregory Marks

More...

- First Humphrey-Hawkins Testimony With Fed Chairwoman Janet Yellen
- Will Also Speak to Senate Banking Committee on Thursday, February 13, 2014

Trading the News: Fed Humphrey-Hawkins Testimony

The Humphrey-Hawkins Testimony with Fed Chair Janet Yellen may heavily influence USD price action in the days ahead as market participants weigh the outlook for monetary policy.

What’s Expected:

Time of release: 02/11/2014 13:30 GMT, 8:30 EST
Primary Pair Impact: EURUSD
Expected: --
Previous: --
DailyFX Forecast: --

Why Is This Event Important:

Indeed, there’s a risk that the Fed will implement a more dovish twist to its forward-guidanceas the unemployment rate quickly approaches the 6.5% threshold, but we may see a growing number of central bank officials favor another $10B taper at the March 19 meeting amid the prospects for a stronger recovery in 2014.

Expectations: Bullish Argument/Scenario

Release	Expected	Actual
Consumer Credit (DEC)	$12.000B	$18.756B
Average Hourly Earnings (YoY) (JAN)	1.8%	1.9%
Consumer Price Index (YoY) (DEC)	1.5%	1.5%

The Fed may stay on course to normalize monetary policy as the pickup in growth dampens the threat for disinflation, and the bullish sentiment surrounding the greenback may gather pace throughout 2014 should the central bank show a greater willingness to halt Quantitative Easing (QE) later this year.

Risk: Bearish Argument/Scenario

Release	Expected	Actual
Non-Farm Payrolls (JAN)	180K	113K
ADP Employment Change (JAN)	185K	175K
ISM Manufacturing (JAN)	56.0	51.3

However, the slowdown in job growth along with the recent lull in business outputs may dampen bets for a stronger recovery, and the dollar may face additional headwinds over the near-term should the Fed opt for a smaller series of reductions to the asset-purchase program.

How To Trade This Event Risk

Bullish USD Trade: Fed Retains Current Policy, Forward-Guidance

• Need to see red, five-minute candle following the testimony to consider a short trade on EURUSD
• If market reaction favors a long dollar trade, sell EURUSD with two separate position
• Set stop at the near-by swing high/reasonable distance from entry; look for at least 1:1 risk-to-reward
• Move stop to entry on remaining position once initial target is hit; set reasonable limit

Bearish USD Trade: Yellen Adopts More Dovish Tone for Monetary Policy

• Need green, five-minute candle to favor a long EURUSD trade
• Implement same setup as the bullish dollar trade, just in the opposite direction

Potential Price Targets For The Release
EURUSD Daily

• Threatening Descending Channel- Bearish Bias at Risk on Break of 1.3650 (78.6% expansion)
• Relative Strength Index Retains Bearish Momentum- Carving Lower High?
• Interim Resistance: 1.3800 (100.0% expansion) to 1.3830 (61.8% retracement)
• Interim Support: 1.3450 (38.2% retracement) to 1.3460 (50.0% expansion)

Impact that the Fed Testimony has had on EUR/USD during the last release

Period	Data Released	Estimate	Actual	Pips Change (1 Hour post event )	Pips Change (End of Day post event)
JUL 2013	07/17/2013 12:30 GMT	-	-	+25	-10

July 2013 Fed Humphrey-Hawkins Testimony



At the last Humphrey-Hawkins Testimony we saw initial Euro strength, but by Bernanke’s Q&A we saw the greenback gain some strength. Chairman Bernanke reiterated in his testimony that the FOMC was set to taper asset purchases by the end of the year if incoming data remained strong. Now that markets have gone through two $10B reductions in asset purchases in December and January, traders will be looking to remarks from Dr. Janet Yellen for further insight on recent developments in global markets. The new chairwoman will have the chance to clarify her forward guidance as she begins her four year term, although changes in that forward guidance are not expected. A dovish twist could support the market on the a short-term basis, but underlying risks of Fed’s actions remain.

--- Written by David Song, Currency Analyst

More...

- Bank of England (BoE) Seen Adopting Fed-Style Interest Rate Forecast
- Will BoE Lower the Unemployment Threshold from 7%?

Trading the News: Bank of England Inflation Report

The Bank of England’s (BoE) Inflation Report may produce fresh highs in the British Pound should the central bank retain the 7% unemployment threshold, while preserving a positive outlook for the U.K. economy.

What’s Expected:

Time of release: 02/12/2014 10:30 GMT, 5:30 EST
Primary Pair Impact: GBPUSD
Expected: --
Previous: --
DailyFX Forecast: --

Why Is This Event Important:

However, the BoE to talk down bets for a rate hike in 2014 as inflation falls back to the 2% target, and the Monetary Policy Committee (MPC) may lay out an interest rate forecast similar to the Federal Reserve in an effort to better-manage market expectations.

Expectations: Bullish Argument/Scenario

Release	Expected	Actual
Gross Domestic Product (QoQ) (4Q A)	0.7%	0.7%
ILO Unemployment Rate (3M) (NOV)	7.3%	7.1%
Retail Sales ex Auto (MoM) (DEC)	0.3%	2.8%

The BoE may show a greater willingness to normalize monetary policy sooner rather than later as the U.K. recover gathers pace, and the growing threat of an asset-bubble may encourage the central bank to raise borrowing costs later this year in order to balance the risks surrounding the region.

Risk: Bearish Argument/Scenario

Release	Expected	Actual
Industrial Production (MoM) (DEC)	0.6%	0.4%
Manufacturing Production (MoM) (DEC)	0.6%	0.3%
Consumer Price Index (YoY) (DEC)	2.1%	2.0%

However, the recent slowdown in business outputs along with the lower level of price growth may prompt the BoE to implement a dovish twist to its forward-guidance, and the sterling may face a more pronounced downturn should Governor Mark Carney talk down bets of seeing a rate hike later this year or even early 2015.

How To Trade This Event Risk

Bullish GBP Trade: BoE Shows Greater Willingness to Normalize Sooner Rather Than Later

• Need green, five-minute candle following the statement to favor a long GBP trade
• If reaction favors buying British Pound, long GBPUSD with two separate position
• Set stop at the near-by swing low/reasonable distance from entry; need at least 1:1 risk-to-reward
• Move stop to entry on remaining position once initial target is hit, set reasonable limit

Bearish GBP Trade: BoE Pushes Back Rate Hike Expectations

• Need red, five-minute candle to consider a short GBPUSD trade
• Implement same setup as the bullish British Pound trade, just in the opposite direction

Potential Price Targets For The Release
GBPUSD Daily

• Appears to Have Carved Higher Low as RSI Retains Bullish Trend
• Interim Resistance: 1.6700 Pivot to 1.6730 (100.0 expansion)
• Interim Support: 1.6300 Pivot to 1.6310 (50.0 expansion)- Close Basis

Impact that the BoE Inflation report has had on GBP during the last release

Period	Data Released	Estimate	Actual	Pips Change (1 Hour post event )	Pips Change (End of Day post event)
NOV 2013	11/13/2013 10:30 GMT	--	--	+36	+132

November 2013 Bank of England Inflation Report



The BoE adopted a more hawkish tone for monetary policy as the central bank sees the U.K. jobless rate reaching the 7% unemployment threshold faster-than-expected, and it seems as though the committee may have little choice but to normalize monetary policy ahead of schedule as the economic recovery gathers pace. Indeed, the British Pound jumped higher following the shift in the policy outlook, with the GBPUSD clearing the 1.6000 handle, and the sterling continued to gain ground throughout the day as the pair closed at 1.6054.

--- Written by David Song, Currency Analyst

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- German Gross Domestic Product (GDP) to Grow for Three Straight Quarters
- 2Q GDP (0.7%) Marked the Fastest Pace of Growth for 2013

Trading the News: German Gross Domestic Product

Germany’s Gross Domestic Product (GDP) figure may undermine the recent rebound in the EURUSD as Europe’s largest economy is expected to grow yet another 0.3% during the last three-months of 2013.

What’s Expected:

Time of release: 02/14/2014 7:00 GMT, 2:00 EST
Primary Pair Impact: EURUSD
Expected: 0.3%
Previous: 0.3%
DailyFX Forecast: 0.1% to 0.3%

Why Is This Event Important:

As mentioned in DailyFX on Demand, a disappointing growth report may put increased pressure on the European Central Bank (ECB) to further embark on its easing cycle amid the threat for disinflation, and the single currency may continue to carve a series of lower highs paired with lower lows amid the protracted recovery in the monetary union.

Expectations: Bearish Argument/Scenario

Release	Expected	Actual
Industrial Production s.a. (MoM) (DEC)	0.3%	-0.6%
Factory Orders (MoM) (DEC)	0.2%	-0.5%
Retail Sales (MoM) (DEC)	0.2%	-2.5%

Slowing outputs along with the ongoing weakness in private sector consumption may show a slowing recovery in Germany, and a dismal GDP print may spark a selloff in the Euro as it raises the ECB scope to further support the ailing economy.

Risk: Bullish Argument/Scenario

Release	Expected	Actual
Unemployment Change (JAN)	-5K	-28K
GfK Consumer Confidence (FEB)	7.6	8.2
IFO Business Climate (JAN)	110.0	110.6

Nevertheless, improved confidence across the euro-area may generate a pickup in the 4Q growth rate, and a positive development may ultimately threaten the bearish EURUSD trend dating back to 2008 as market participants scale back bets for additional monetary stimulus.

How To Trade This Event Risk

Bearish Euro Trade: German 4Q GDP Misses Market Forecast

• Need red, five-minute candle following the report to favor a bearish Euro trade
• If reaction favors short Euro trade, sell EURUSD with two separate position
• Set stop at the near-by swing high/reasonable distance from entry; need at least 1:1 risk-to-reward
• Move stop to entry on remaining position once initial target is hit, set reasonable limit

Bullish Euro Trade: Growth Rate Tops 0.3%

• Need green, five-minute candle to consider a long EURUSD trade
• Implement same strategy as the bearish Euro trade, just in the opposite direction

Potential Price Targets For The Release
EURUSD Daily

• At Risk for Range-Bound Prices Ahead of ECB March 6 Meeting
• Relative Strength Index Clears Bearish Trend
• Interim Resistance: 1.3800 (100.0 expansion) to 1.3830 (61.8 retracement)
• Interim Support: 1.3450 (38.2% retracement) to 1.3460 (50.0% expansion)

Impact that the German GDP report has had on EUR during the last quarter

Period	Data Released	Estimate	Actual	Pips Change (1 Hour post event )	Pips Change (End of Day post event)
3Q F	11/22/2013 7:00 GMT	0.3%	0.3%	+10	+65

3Q 2013 German Gross Domestic Product



For the third quarter final print, Germany met preliminary figures of 0.3% QoQ growth and the Euro was left little unchanged against the greenback after a slight spike. More volatility occurred at the 09:00GMT where we saw a large EUR/USD move to the upside. Although German IFO surveys missed expectations, Italian Retail Sales MoM came in far above expectations at the same time release. Note that we may see more volatility after the German GDP once more as we have Italian GDP at 09:00GMT and the Eurozone print at 10:00GMT.

--- Written by David Song, Currency Analyst and Gregory Marks

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- U.K. Jobless Claims to Decline for Fifteen-Consecutive Month
- ILO Unemployment Rate to Hold at 7.1%- Lowest Since 2009

Trading the News: U.K. Jobless Claims Change

The bullish sentiment surrounding the British Pound may gather pace over the next 24-hours of trading as U.K. Jobless Claims are expected to contract another 20.0K in January.

What’s Expected:

Time of release: 02/19/2014 9:30 GMT, 4:30 EST
Primary Pair Impact: GBPUSD
Expected: -20.0K
Previous: -24.0K
DailyFX Forecast: -10.0K to -25.0K

Why Is This Event Important:

Beyond the Bank of England (BoE) Minutes, an upbeat labor report may a more meaningful reaction in the GBPUSD as it raises the outlook for growth, and it seems as though Governor Mark Carney will look to normalize monetary policy sooner rather than later as the central bank anticipates a stronger recovery in 2014.

Expectations: Bullish Argument/Scenario

Release	Expected	Actual
Construction Output s.a. (MoM) (DEC)	2.0%	2.0%
Purchasing Manager Index (JAN)	61.5	64.6
Retail Sales ex Auto (MoM) (DEC)	0.3%	2.8%

The ongoing pickup in building activity paired with the resilience in private consumption may spur a marked rise in job growth, and a positive development should prompt a bullish reaction in the sterling as it encourages an improved outlook for the U.K economy.

Risk: Bearish Argument/Scenario

Release	Expected	Actual
Industrial Production (MoM) (DEC)	0.6%	0.4%
Manufacturing Production (MoM) (DEC)	0.6%	0.3%
Purchasing Manager Index- Manufacturing (JAN)	57.3	56.7

However, we may see U.K. firms scale back on hiring amid the slowdown business outputs, and a dismal print may trigger a larger correction in the GBPUSD as it dampens bets of seeing a rate hike later this year or even in early 2015.

How To Trade This Event Risk

Bullish GBP Trade: Jobless Claims Contract 20.0K+, Jobless Rate Falls From 7.1%

• Need green, five-minute candle following the release to consider a long British Pound trade
• If market reaction favors buying sterling, long GBPUSD with two separate position
• Set stop at the near-by swing low/reasonable distance from entry; look for at least 1:1 risk-to-reward
• Move stop to entry on remaining position once initial target is hit, set reasonable limit

Bearish GBP Trade: U.K. Employment Report Disappoints

• Need red, five-minute candle to favor a short GBPUSD trade
• Implement same setup as the bullish British Pound trade, just in opposite direction

Potential Price Targets For The Rate Decision

GBPUSD M5 : 100 pips price movement by GBP - Claimant Count Change news event :

• Looking for Higher Low as Ascending Channel Remains Intact
• Relative Strength Index Preserves Bullish Trend from July
• Interim Resistance: 1.6850-60 (78.6% expansion)
• Interim Support: 1.6300 Pivot to 1.6310 (50.0% expansion)

Impact that the U.K. Jobless Claims report has had on GBP during the last release

Period	Data Released	Estimate	Actual	Pips Change (1 Hour post event )	Pips Change (End of Day post event)
DEC 2013	01/22/2014 9:30 GMT	-32.4K	-24.0K	+70	+98

GBPUSD M5 : 54 pips movement by GBP - Claimant Count Change :

Jobless Claims figures came in at -24.0K, missing economist estimates of a -32.4K change in the unemployment count. In addition, prior figures for November saw a revision from -36.7K to -34.3K. December’s figures marked the third higher print after the count made a September low never before seen on our ten year records.

Although the print missed estimates, the negative figure still indicated a contraction in the unemployment claims count and the ILO Unemployment Rate dropped to 7.1% vs. 7.3% estimates. This supported the Pound broadly at the release as market sentiment continued to remain bullish on the Cable. After pressing multi-year highs, we may need to see a very strong print to continue the Pound’s ability to break key levels and fresh highs.
--- Written by David Song, Currency Analyst and Gregory Marks

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