Trading News Events

- U.K. Retail Sales to Mark First Decline Since October
- 1.2% Contraction in Household Spending Would Be Largest Since April 2012

Trading the News: U.K. Retail Sales

The British Pound may face a larger correction over the remainder of the week as U.K. Retail Sales are expected to contract 1.2% in January.

What’s Expected:

Time of release: 02/21/2014 9:30 GMT, 4:30 EST
Primary Pair Impact: GBPUSD
Expected: -1.2%
Previous: 2.8%
DailyFX Forecast: -1.0% to 1.0%

Why Is This Event Important:

A slowdown in household spending may drag on the British Pound as it dampens the prospects of seeing a Bank of England (BoE) rate hike later this year or even in early 2015, but the data print may pave the way for fresh highs in the GBPUSD should it highlight an improved outlook for growth and inflation.

Expectations: Bullish Argument/Scenario

Release	Expected	Actual
Jobless Claims Change (JAN)	-20.0K	-27.6K
Average Weekly Earnings ex Bonus (3MoY) (DEC)	0.9%	1.0%
Consumer Price Index (YoY) (JAN)	2.0%	1.9%

The uptick in wage growth along with the ongoing improvement in the labor market may spur a better-than-expected sales report, and a positive development should spark a bullish reaction in the British Pound as it raises the BoE’s scope to normalize monetary policy sooner rather than later.

Risk: Bearish Argument/Scenario

Release	Expected	Actual
Net Consumer Credit (DEC)	0.7B	0.6B
CBI Reported Sales (JAN)	25	14
CBI Business Optimism (JAN)	25	21

Nevertheless, the slowdown in private sector credit paired with the persistent slack in the real economy may ultimately drag on consumption, and a dismal development may spur a more meaningful correction in the GBPUSD as market participants scale back bets of seeing higher borrowing costs in the U.K.

How To Trade This Event Risk

Bullish GBP Trade: Retail Sales Climbs 0.3% or Greater

• 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: Household Spending Disappoints

• 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

• Price & RSI Retains Bullish Trend; Looking for Lower High
• Interim Resistance: 1.6850-60 (78.6% expansion)
• Interim Support: 1.6300 Pivot to 1.6310 (50.0% expansion)

Impact that the U.K. Retail Sales 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	01/17/2014 9:30 GMT	0.3%	2.8%	+92	+73

December 2013 U.K. Retail Sales (GBPUSD M5 : 116 pips price movement by GBP Retail Sales news event) :

December Retail Sales figures out of the U.K. blew past street estimates and sent the GBP/USD pair flying over 100pips and above the 1.64 level. After a 2.8% MoM gain from November to December, it is no surprise that estimates point to a negative MoM print this time around. Current surveys indicate a -1.2% MoM and 5.0% YoY reading while those figures incl. auto are slightly better. Data and fundamentals continue to remain strong out of the U.K. and any weakness on a miss here may be short lived when taking a medium term approach.

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

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- Canada Consumer Price Index to Increase for Third Consecutive Month
- Headline Inflation of 1.3% Would Match the Highest Reading Seen in 2013

Trading the News: Canada Consumer Price Index

A pick up in Canada Consumer Prices may spur a more meaningful correction in the USDCAD as it limits the threat of seeing the Bank of Canada (BoC) implement a rate cut in 2014.

What’s Expected:

Time of release: 02/21/2014 13:30 GMT, 8:30 EST
Primary Pair Impact: USDCAD
Expected: 1.3%
Previous: 1.2%
Forecast: 1.2% to 1.3%

Why Is This Event Important:

Despite the recent slowdown in economic activity, Governor Stephen Poloz may retain a rather balanced tone for monetary policy should we see a diminishing risk for disinflation, and the BoC may keep the benchmark interest rate on hold this year as central bank officials see a more robust recovery in the U.S. – Canada’s largest trading partner.

Expectations: Bullish Argument/Scenario

Release	Expected	Actual
New Housing Price Index (MoM) (DEC)	0.1%	0.1%
Industrial Product Price (MoM) (DEC)	0.3%	0.7%
Average Weekly Earnings (YoY) (NOV)	--	2.5%

Rising input costs along with the uptick in wage growth may spark a further rise in consumer prices, and a higher-than-expected inflation print may spur a more meaningful correction in the USDCAD as it limits the BoC’s scope to implement a rate cut in 2014.

Risk: Bearish Argument/Scenario

Release	Expected	Actual
Wholesale Trade Sales (MoM) (DEC)	-0.4%	-1.4%
Existing Home Sales (MoM) (JAN)	--	-3.3%
Manufacturing Sales (MoM) (DEC)	0.0%	-0.9%

However, firms may continue to conduct heavy discounting amid the slowdown in consumption paired with the persistent slack in the real economy, and a dismal CPI print may spur fresh highs in the USDCAD as the BoC shows a greater willingness to revert back to its easing cycle.

How To Trade This Event Risk

Bullish CAD Trade: Headline Inflation Advances 1.3% or Greater

• 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 high/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

Bearish CAD Trade: Canada Consumer Price Report Disappoints

• 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

• Appears to Have Carved Higher Low Ahead of 1.0900
• Relative Strength Index Breaks Out of Steep Negative Slope
• Interim Resistance: 1.1172 Pivot to 1.1230 (50.0% expansion)
• 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)
DEC 2013	01/24/2014 13:30 GMT	-0.1%	-0.2%	-11	-2

December 2013 Canada Consumer Price Index (USDCAD M5 : 15 pips up and 48 pips down by CAD - CPI news event) :

As was the case during the November print, CPI data out of Canada for the month of December disappointed by a tenth of a percent. Unlike last month where USD/CAD spiked to fresh multi-year highs, price action was missed and the pair ended the day almost flat. It is no surprise that price action slowed after such a large move post-breakout, especially as market participants scaled back positions before the weekly close and FOMC Rate Decision that following Wednesday. As for this print, price action in USD/CAD to the upside over the past 24 hours combined with important time cycles strongly supports a continuation higher if we see weaker than expected CPI figures. On the other hand, a meet or beat of the inflation data could provide for an opportunistic setup to fade Friday lows.

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

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Originally Posted by TheNews

- U.K. Retail Sales to Mark First Decline Since October
- 1.2% Contraction in Household Spending Would Be Largest Since April 2012

Trading the News: U.K. Retail Sales

The British Pound may face a larger correction over the remainder of the week as U.K. Retail Sales are expected to contract 1.2% in January.

What’s Expected:

Time of release: 02/21/2014 9:30 GMT, 4:30 EST
Primary Pair Impact: GBPUSD
Expected: -1.2%
Previous: 2.8%
DailyFX Forecast: -1.0% to 1.0%

Why Is This Event Important:

A slowdown in household spending may drag on the British Pound as it dampens the prospects of seeing a Bank of England (BoE) rate hike later this year or even in early 2015, but the data print may pave the way for fresh highs in the GBPUSD should it highlight an improved outlook for growth and inflation.

Expectations: Bullish Argument/Scenario

Release	Expected	Actual
Jobless Claims Change (JAN)	-20.0K	-27.6K
Average Weekly Earnings ex Bonus (3MoY) (DEC)	0.9%	1.0%
Consumer Price Index (YoY) (JAN)	2.0%	1.9%

The uptick in wage growth along with the ongoing improvement in the labor market may spur a better-than-expected sales report, and a positive development should spark a bullish reaction in the British Pound as it raises the BoE’s scope to normalize monetary policy sooner rather than later.

Risk: Bearish Argument/Scenario

Release	Expected	Actual
Net Consumer Credit (DEC)	0.7B	0.6B
CBI Reported Sales (JAN)	25	14
CBI Business Optimism (JAN)	25	21

Nevertheless, the slowdown in private sector credit paired with the persistent slack in the real economy may ultimately drag on consumption, and a dismal development may spur a more meaningful correction in the GBPUSD as market participants scale back bets of seeing higher borrowing costs in the U.K.

How To Trade This Event Risk

Bullish GBP Trade: Retail Sales Climbs 0.3% or Greater

• 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: Household Spending Disappoints

• 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

• Price & RSI Retains Bullish Trend; Looking for Lower High
• Interim Resistance: 1.6850-60 (78.6% expansion)
• Interim Support: 1.6300 Pivot to 1.6310 (50.0% expansion)

Impact that the U.K. Retail Sales 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	01/17/2014 9:30 GMT	0.3%	2.8%	+92	+73

December 2013 U.K. Retail Sales (GBPUSD M5 : 116 pips price movement by GBP Retail Sales news event) :

December Retail Sales figures out of the U.K. blew past street estimates and sent the GBP/USD pair flying over 100pips and above the 1.64 level. After a 2.8% MoM gain from November to December, it is no surprise that estimates point to a negative MoM print this time around. Current surveys indicate a -1.2% MoM and 5.0% YoY reading while those figures incl. auto are slightly better. Data and fundamentals continue to remain strong out of the U.K. and any weakness on a miss here may be short lived when taking a medium term approach.

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

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2013-02-21 09:30 GMT | [GBP - Retail Sales]

• past data is 2.5%
• forecast data is -1.0%
• actual data is -1.5% according to the latest press release

if actual > forecast = good for currency (for GBP in our case)

==========

UK retail sales drop 1.5% – more than expected – but GBP/USD recovers

The volume of British retail sales dropped by 1.5%. Expectations were low for this retail sales release. They were expected to drop by 0.9% for the month of January after an outstanding leap of 2.6% in December, which was now upgraded to 2.7%. Year over year, sales rose by 4.3%, less than 5% expected. Core sales also dropped by 1.5%, and y/y it stands at 4.8%, both also slightly below expectations. All major UK figures disappointed this week.

==========

GBPUSD M5 : 58 pips price movement by GBP - Retail Sales news event

- U.S. Consumer Confidence to Mark First Decline in Three-Months
- Conference Board’s Survey has Held Above 80.0 for Four Times in 2013

Trading the News: U.S. Consumer Confidence

The Conference Board’s Consumer Confidence survey is expected to narrow to 80.0 in February and a marked decline in household sentiment may trigger a bearish reaction in the U.S. dollar as it dampens the outlook for growth and inflation.

What’s Expected:

Time of release: 02/25/2014 15:00 GMT, 10:00 EST
Primary Pair Impact: EURUSD
Expected: 80.0
Previous: 80.7
DailyFX Forecast: 78.0 to 82.0

Why Is This Event Important:

With the Federal Open Market Committee (FOMC) poised to discuss another $10B taper at the March 19 meeting, a dismal confidence reading may have a greater impact on the interest rate outlook, and the greenback may face additional headwinds over the near to medium-term as the central bank retains the dovish twist to its forward-guidance.

Expectations: Bearish Argument/Scenario

Release	Expected	Actual
Advance Retail Sales (MoM) (JAN)	0.0%	-0.4%
Change in Non-Farm Payrolls (JAN)	180K	113K
Durable Goods Orders (DEC)	1.8%	-4.3%

The ongoing slack in the labor market paired with the slowdown in private consumption may highlight a further decline in household sentiment, and a dismal print may generate a further decline in the greenback as it dampens the prospects for a stronger recovery in 2014.

Risk: Bullish Argument/Scenario

Release	Expected	Actual
U. of Michigan Confidence (FEB P)	80.2	81.2
Consumer Credit (DEC)	$12.000B	$18.756B
Average Hourly Earnings (YoY) (JAN)	1.8%	1.9%

However, the uptick in wage growth along with the expansion in consumer credit may prop up household confidence, and a better-than-expected release may spur a more meaningful rebound in the USD as it raises the Fed’ s scope to normalize monetary policy sooner rather than later.

How To Trade This Event Risk

Bearish USD Trade: Confidence Survey Weakens to 80.0 or Lower

• Need to see green, five-minute candle following the print to consider a long trade on EURUSD
• If market reaction favors a short dollar trade, buy EURUSD 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

Bullish USD Trade: Household Sentiment Unexpectedly Improves

• Need red, five-minute candle to favor a short EURUSD trade
• Implement same setup as the bearish dollar trade, just in the opposite direction

Potential Price Targets For The Release
EURUSD Daily

• Preserves 2008 Downward Trend; Remains in Topping Process Capped by 1.3770
• Bullish RSI Momentum Under Pressure; Downside Break to Highlight 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 U.S. Consumer Confidence survey 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)
JAN 2014	01/28/2014 15:00 GMT	78.0	80.7	-10	-20

January 2014 U.S. Consumer Confidence (EURUSD M5 : 16 pips price movement by USD - Consumer Confidence news event) :

Consumer Confidence out of the U.S. had a small impact on EUR/USD price action following the print, but the better than expected reading came out in the Dollar’s favor. This February’s reading may provide more volatility as market participants assess whether recent weather has been the driver of negative data over the past few weeks. If we do see consumer confidence follow the rest of U.S. data to the downside, then we can expect Dollar weakness against the majors.

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

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- German Unemployment to Decline for Three Straight Month
- Unemployment Reported to Hold at 6.8% for Third Month

Trading the News: German Unemployment Change

Another 10.0K drop in German Unemployment may spur a bullish reaction in the EURUSD as it limit’s the European Central Bank’s (ECB) scope to further embark on its easing cycle at the March 6 meeting.

What’s Expected:

Time of release: 02/27/2014 8:55 GMT, 3:55 EST
Primary Pair Impact: EURUSD
Expected: -10K
Previous: -28K
DailyFX Forecast: -10K to 10K

Why Is This Event Important:

With the ECB interest rate decision quickly approaching, positive developments coming out of Europe’s largest economy may limit the downside risk for the single currency, but the Governing Council may have little choice but to implement more non-standard measures this year amid the persistent threat for disinflation.

Expectations: Bullish Argument/Scenario

Release	Expected	Actual
IFO Business Climate (FEB)	110.5	111.3
IFO Expectations (FEB)	108.1	108.3
Gross Domestic Product s.a. (QoQ) (4Q P)	0.3%	0.4%

German’s unemployment report may continue to exceed market expectations as the rise in business confidence instills a positive outlook for the labor market, and a better-than-expected print may generate a short-term rebound in the EURUSD as it dampens bets for additional monetary support.

Risk: 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%

However, the slowdown in business outputs paired with the ongoing weakness in private sector consumption may limit the prospects for a marked decline in unemployment, and a dismal print may heighten the bearish sentiment surrounding the single currency as it curbs the outlook for growth and inflation.

How To Trade This Event Risk

Bullish Euro Trade: German Unemployment Falls 10.0K or Greater

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

Bearish Euro Trade: Labor Report Disappoints

• Need red, five-minute candle following the release to look at a short EURUSD entry
• Implement same setup as the bullish Euro trade, just in reverse

Potential Price Targets For The Release

EUR/USD Daily

• Carves Lower High Within 2008 Down Trend; At Risk for Lower Low
• RSI Fails to Preserve Bullish Momentum from Start of February
• 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 change in German Unemployment has had on EUR during the last month

Period	Data Released	Estimate	Actual	Pips Change (1 Hour post event )	Pips Change (End of Day post event)
JAN 2014	01/30/2014 8:55 GMT	-6K	-28K	-27	-67

EURUSD M5 : 12 pips price movement by German Unemployment Change news event (2013-10-30 08:55 GMT)

Germany’s January unemployment change print came in far better than market expectations and the -28K change figure was the best since 2011. The unemployment figure also ticked down by a tenth of a percent to 6.8%, but the Euro fell against the Dollar and continued to until bottoming out on February third. Although inflation data met estimates on Monday, EUR crosses remain at key technical levels and negative catalysts could bring out sellers in EUR/USD and EUR/JPY pairs.

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

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- Canada GDP to Slow for Second Time in 2013
- Growth Rate Expected to Exceeded 2% for Third Time in 2013

Trading the News: Canada Gross Domestic Product (GDP)

A slowdown in Canada’s Gross Domestic Product (GDP) may heighten the bearish sentiment surrounding the Canadian dollar as it raises the Bank of Canada’s (BoC) scope to cut the benchmark interest rate later this year.

What’s Expected:

Time of release: 02/28/2014 13:30 GMT, 8:30 EST
Primary Pair Impact: USDCAD
Expected: 2.6%
Previous: 2.7%
DailyFX Forecast: 2.5% to 2.6%

Why Is This Event Important:

In light of the protracted recovery, Governor Stephen Poloz may take additional measures to encourage a ‘soft landing,’ and a material shift in the policy outlook may produce fresh highs in the USDCAD as the Federal Reserve remains poised to discuss another $10B taper in March.

Expectations: Bearish Argument/Scenario

Release	Expected	Actual
Retail Sales (MoM) (DEC)	-0.4%	-1.8%
Existing Home Sales (MoM) (JAN)	--	-3.3%
International Merchandise Trade (DEC)	-0.65B	-1.66B

The widening trade deficit along with the slack in private sector consumption may generate a dismal GDP report, and a material slowdown in the growth rate may trigger a bearish reaction in the Canadian dollar as it heighten bets for a BoC rate cut.

Risk: Bullish Argument/Scenario

Release	Expected	Actual
Net Change in Employment (JAN)	20.0K	29.4K
Ivey Purchasing Manager Index s.a. (JAN)	51.0	56.8
Average Weekly Earnings (YoY) (NOV)	--	2.5%

Nevertheless, the pickup in employment paired with the rise in business investments may help to produce a positive result, and better-than-expected GDP print may spur a short-term pullback in the USDCAD as market participants scale back bets for more monetary easing.

How To Trade This Event Risk

Bearish CAD Trade: GDP Report Shows Marked Slowdown in Growth

• Need green, five-minute candle after the GDP report to consider long USDCAD entry
• If the market reaction favors a short Canadian dollar trade, establish long 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

Bullish CAD Trade: Growth Rate Rises 2.6% or Greater

• Need red, five-minute candle following the release to look at a short 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

• Lack of Momentum to Close Above 1.1150 to Highlight Lower High
• Relative Strength Index Retains Long-Term Bullish Momentum
• Interim Resistance: 1.1194 Pivot to 1.1230 (50.0% expansion)
• Interim Support: 1.0900 Pivot to 1.0930 (61.8% expansion)

Impact that the Canada GDP report has had on CAD during the last quarter

Period	Data Released	Survey	Actual	Pips Change (1 Hour post event )	Pips Change (End of Day post event)
3Q 2013	11/29/2013 13:30 GMT	2.5%	2.7%	+12	+37

USDCAD M5 : 34 pips price movement by CAD - GDP news event :

The Canadian Dollar saw a bit of strength following the better than expected QoQ GDP print, but the USD/CAD pair remained supported by a key break and hold of former resistance at the July and September highs. The pair closed out the Thanksgiving weekend higher and has since continued to push higher on technical factors as well as fundamentals. Data out of Canada since December has been dismal to say the least, but as of late we have seen a slight correction to the downside. A poor GDP print here may help fuel momentum in the breakout.

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

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- European Central Bank (ECB)to Publish 2016 Economic Projections
- Governing Council Sees Headline 2015 Inflation at 1.3%

Trading the News: European Central Bank Interest Rate Decision

According to a Bloomberg News survey, 40 of the 54 economists polled see the European Central Bank (ECB) retaining its current policy in March, but the broad range of market speculation (rate cut, negative deposit rates, verbal intervention, unsterilized bond purchases, Long-Term Refinancing Operation) may produce increased volatility around the interest rate decision as market participants weigh the outlook for monetary policy.

What’s Expected:

Time of release: 03/06/2014 12:45 GMT, 7:45 EST
Primary Pair Impact: EURUSD
Expected: 0.25%
Previous: 0.25%
Forecast: 0.25%

Why Is This Event Important:

Despite expectations of seeing the ECB further embark on its easing cycle, the central bank’s 2016 economic projects may set the tone for the Euro should the figures highlight a greater threat for deflation, and an inflation forecast below 1.3% may trigger a sharp selloff in the EURUSD as it heightens bets for additional monetary support.

Expectations: Bearish Argument/Scenario

Release	Expected	Actual
Euro-Zone Unemployment Rate (JAN)	12.0%	12.0%
Euro-Zone Trade Balance s.a. (DEC)	14.4B	13.7B
Euro-Zone Industrial Production s.a. (MoM) (DEC)	-0.3%	-0.7%

Indeed, the ECB’s 2016 forecast may highlight a greater threat for deflation as the EU lowers its own growth projections for the monetary union, and a material shift in the policy outlook may lead the EURUSD to give back the rebound from February as interest rate expectations deteriorate.

Risk: Bullish Argument/Scenario

Release	Expected	Actual
Euro-Zone Retail Sales (MoM) (JAN)	0.8%	1.6%
Euro-Zone Consumer Price Index (YoY) (FEB A)	0.7%	0.8%
Euro-Zone Gross Domestic Product s.a. (QoQ) (4Q A)	0.2%	0.3%

However, President Mario Draghi may adopt a rather neutral tone for monetary policy amid the recent pickup in economic activity, and the Euro may continue to threaten the 1.3800 handle should the central bank scale back its willingness to further embark on its easing cycle.

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 Highlights Greater Risk for Deflation

• 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 Sticks to Current 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

• Marks Another Failed Close Above 1.3800; Retails 2008 Down Trend
• RSI Struggling to Preserve Bullish Momentum Carried Over From February
• 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)
FEB 2014	02/06/2014 12:45 GMT	0.25%	0.25%	+87	+88

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

Although the Euro was little changed following the announcement that rates would remain on hold, Draghi’s presser sparked a wave of Euro strength. The central bank head stated that the complexity of the situation prevented the ECB from action ‘this month.’ Despite a lack of Euro volatility as of late, as the EURUSD pair sits just below a 10yr trendline ahead of a key ECB meeting, we may very well see directional trends form in regards to fundamental developments. As many market participants are expecting ECB action in regards to a rate cut of some sort, little to no action could be seen as bullish for the Euro if it breaks and holds current key resistance levels.

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

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- U.S. Non-Farm Payrolls to Climb 150K, Unemployment Rate to Hold at 6.6%
- NFPs Have Missed Market Forecast the Last Two Consecutive Prints

Trading the News: U.S. Non-Farm Payrolls

The U.S. Non-Farm Payrolls report may prop up the dollar as the economy is expected to add another 150K jobs in February, and a pickup in employment may instill a bullish outlook for the greenback as the Federal Reserve is widely anticipated to discuss another $10B taper at the March 19 meeting.

What’s Expected:

Time of release: 03/07/2014 13:30 GMT, 8:30 EST
Primary Pair Impact: EURUSD
Expected: 150K
Previous: 113K
Forecast: 100K to 150K

Why Is This Event Important:

However, the recent slowdown in economic activity certainly raises the risk of seeing another weaker-than-expected NFP print, and a dismal result may heighten the bearish sentiment surrounding the reserve currency as it limits the Fed’s scope to normalize monetary policy sooner rather than later.

Expectations: Bullish Argument/Scenario

Release	Expected	Actual
Challenger Job Cuts (YoY) (FEB)	--	-24.4%
ISM Manufacturing (FEB)	52.3	53.2
NFIB Small Business Optimism (JAN)	93.9	94.1

The decline in planned job cuts along with the rise in business sentiment may pave the way for a strong NFP print, and a marked increase in employment may present a near-term rebound in the greenback as it raises the outlook for growth and inflation.

Risk: Bearish Argument/Scenario

Release	Expected	Actual
ISM Non-Manufacturing (Employment) (FEB)	--	47.5
ADP Employment Change (FEB)	155K	139K
Advance Retail Sales (MoM) (OCT)	0.1%	0.4%

However, the slowdown in job growth may persist in February amid the ongoing slack in the real economy, and another dour employment report may spur a sharp selloff in the greenback as market participants see the Fed retaining its highly accommodative policy stance for an extended period of time.

How To Trade This Event Risk

Bullish USD Trade: NFP Increases 155K+; Unemployment Holds at 6.6%

• Need to see red, five-minute candle following the print 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: February Job Growth Falls Short of Market Expectations

• 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

• Close Above 1.3800 Negates 2008 Bear Trend; 1.3960-70 Up Next?
• Bullish Relative Strength Index Favors Topside Targets
• Interim Resistance: 1.3870 (50.0% expansion) to 1.3900 Pivot
• Interim Support: 1.3650 (78.6% expansion) to 1.3660 (23.6% expansion)

Impact that the U.S. Non-Farm Payrolls report has had on EUR/USD during the last month

Period	Data Released	Estimate	Actual	Pips Change (1 Hour post event )	Pips Change (End of Day post event)
JAN 2014	2/07/2013 13:30 GMT	181K	113K	+10	+56

January 2014 U.S. Non-Farm Payrolls

Last month’s NFP release led to the regular USD chop, but the disappointing figure and weak December revision pushed EUR/USD to over 50 pips higher to end the week. Despite this weak data combined with those NFPs of December and a multitude of other US economic figures that have come in to the downside, FOMC members and Dr. Janet Yellen herself have continued to reiterate that tapering would continue. Now that market participants have accepted this fact, it is likely FX markets continue to respect data relative to their currency in a good news is good and bad news is bad mentality. This has been appropriately reflected in recent USD weakness, despite continuous all-time highs in the US S&P 500 index. If we see poor revisions to January’s 113K print in addition to weakness in the February reading, USD weakness may end the week. Note that excess volatility may occur in USD/CAD as we also have Candian employment data being released at 13:30GMT.

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

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- Reserve Bank of New Zealand to Raise Rates for First Time Since 2010
- Markets Pricing 98% Chance for 25bp Rate Hike According to OIS

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

According to a Bloomberg News survey, all of the 15 economists polled see the Reserve Bank of New Zealand (RBNZ) raising the benchmark interest rate by 25bp in March, and the central bank may look to normalize monetary policy throughout 2014 as the pickup in economic activity raises the outlook for growth and inflation.

What’s Expected:

Time of release: 03/12/2014 20:00 GMT, 16:00 EDT
Primary Pair Impact: NZD/USD
Expected: 2.75%
Previous: 2.50%
Forecast: 2.75%

Why Is This Event Important:

Indeed, RBNZ Governor Graeme Wheeler may sound a more hawkish this time around amid the ongoing threat of an asset-bubble, and interest rate decision may spur fresh highs in the New Zealand dollar should the central bank show a greater willingness to implement a series of rate hike over the coming months.

Expectations: Bullish Argument/Scenario

Release	Expected	Actual
Trade Balance (JAN)	230M	306M
Employment Change (QoQ) (4Q)	0.6%	1.1%
Private Wages ex Overtime (QoQ) (4Q)	0.5%	0.6%

With that said, the RBNZ may lay out a more detailed exit strategy in light of the pickup in global trade along with the ongoing improvement in the labor market, and a material shift in the policy outlook should prop-up the higher-yielding currency as the central bank moves away from its easing cycle.

Risk: Bearish Argument/Scenario

Release	Expected	Actual
Building Permits (MoM) (JAN)	-3.5%	-8.3%
ANZ Consumer Confidence (MoM) (FEB)	--	-2.1%
Retail Sales ex Inflation (QoQ) (4Q)	1.7%	1.2%

Nevertheless, the RBNZ may stick to its current policy amid the threats surrounding the Emerging Market (EM) economies, and the kiwi may give back the advance carried over from the previous month should the central bank defy market expectations and keep borrowing costs on hold.

How To Trade This Event Risk

Bullish NZD Trade: RBNZ Raises Rates & Pledges to Normalize Further in 2014

• 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: Governor Wheeler Disappoints & Preserves Current Policy

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

Potential Price Targets For The Rate Decision

NZD/USD Daily

• Stuck in Wedge/Triangle Formation From 2011; Bullish Breakout on Tap?
• Relative Strength Index Preserves Bearish Trend Dating Back to November
• Interim resistance: 0.8540-50 (50.0% expansion)
• Interim support: 0.8220 (38.2% retracement) to 0.8230 (38.2% 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)
Jan 2014	01/29/2014 20:00 GMT	2.50%	2.50%	-52	-86

January 2014 Reserve Bank of New Zealand Interest Rate Decision

As the RBNZ left rates at 2.50% at the January meeting amid speculation of a hike, the NZD/USD pair fell 52 pips to the downside within the hour and went on to suffer losses below the 81 level in the following days. Since then we have seen a resumption of the uptrend and nearing the rate decision markets are pricing in a 25bps hike. It is important to note that just because rate hikes traditionally can trigger strength in a currency, the fact that markets have largely priced in these developments may adversely impact the NZD/USD if we only see a 25bps hike.

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

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- U.S. Retail Sales to Increase for First Time in Three-Months
- Household Spending Rose 10 Months in 2013

Trading the News: U.S. Advance Retail Sales

A rebound in U.S. Retail Sales may generate a meaningful rebound in the dollar as it raises the prospects for a stronger recovery in the world’s largest economy.

What’s Expected:

Time of release: 03/13/2014 12:30 GMT, 8:30 EDT
Primary Pair Impact: EURUSD
Expected: 0.2%
Previous: -0.4%
Forecast: -0.2% to 0.4%

Why Is This Event Important:

With the Federal Open Market Committee (FOMC) widely expected to discuss another $10B taper at the March 19 meeting, a pickup in private sector consumption may put increased pressure on the central bank to normalize monetary policy sooner rather than later, but we may see Fed Chair Janet Yellen preserve the zero-interest rate policy (ZIRP) for an extended period of time in an effort to curtail the ongoing slack in the real economy.

Expectations: Bullish Argument/Scenario

Release	Expected	Actual
Change in Non-Farm Payrolls (FEB)	149K	175K
Average Hourly Earnings (YoY) (FEB)	2.0%	2.2%
Personal Income (JAN)	0.2%	0.3%

Faster wage growth along with uptick in employment may generate a large pickup in household spending, and a positive development should encourage a more meaningful advance in the dollar as it raises the outlook for growth and inflation.

Risk: Bearish Argument/Scenario

Release	Expected	Actual
Consumer Credit (JAN)	$14.000B	$13.698B
Consumer Confidence (FEB)	80.0	78.1
Consumer Price Index (YoY) (JAN)	1.6%	1.6%

However, retail spending may fall short of market expectations amid rising prices paired with the slowdown in private sector credit, and a dismal sales report may spur a further decline in the greenback as it drags on interest rate expectations.

How To Trade This Event Risk

Bullish USD Trade: Household Spending Increases 0.2% or Greater

• Need to see red, five-minute candle following the release 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: Retail Sales Disappoints

• 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

• Remains Upward Trending Channel While Preserving March Opening Range (1.3914)
• Bullish RSI Momentum Continues to Favor Further Advances
• 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 U.S. Retail Sales Report 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)
JAN 2014	02/13/2014 13:30 GMT	0.0%	-0.4%	Flat	+7

January 2014 U.S. Retail Sales

Volatility across the board was muted at the last Retail Sales report even though the headline figure missed market expectations by four tenths of a percent. EURUSD had seen some strength earlier in the day on account of German CPI meeting estimates of -0.6% MoM. As for this print, it is likely this is the last figure analysts can continue to blame on poor weather conditions in the northeast. Note that the headline figure may be dragged lower following recent reports out of automakers regarding poor sales as of late.

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

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