Trading News Events

- U. of Michigan Confidence to Improve for Second Consecutive Month
- Has Held Above 80 for the Last Three-Month; High of 85.1 in 2013

Trading the News: U. of Michigan Confidence

A further pickup in the U. of Michigan Confidence survey may prop up the U.S. dollar ahead of the Fed’s March 19 meeting as it raises the prospects for a stronger recovery in 2014.

What’s Expected:

Time of release: 03/14/2014 13:55 GMT, 9:55 EDT
Primary Pair Impact: EURUSD
Expected: 82.0
Previous: 81.6
Forecast: 80.0 to 83.0

Why Is This Event Important:

Indeed, positive developments coming out of the U.S. economy may heighten bets of seeing another $10B reduction in the asset-purchase program, but an unexpected decline in household sentiment may drag on interest rate expectations as Fed Chair Janet Yellen pledges to retain the zero-interest rate policy even after achieving the 6.5% threshold for unemployment.

Expectations: Bullish Argument/Scenario

Release	Expected	Actual
Advance Retail Sales (MoM) (FEB)	0.2%	0.3%
Change in Non-Farm Payrolls (FEB)	149K	175K
Average Hourly Earnings (YoY) (FEB)	2.0%	2.2%

The rebound in retail sales along with the pickup in wage growth may highlight a further improvement in household sentiment, and an upbeat print may pave the way for a more meaningful rebound in the greenback as it raises the Fed’s scope to normalize monetary policy sooner rather than later.

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, U.S. consumer confidence may unexpectedly deteriorate amid higher living costs paired with the recent slowdown in private sector credit, and a weaker-than-expected survey may prompt another selloff in the dollar as it gives the Fed greater scope to retain its highly accommodative policy stance for an extended period of time.

How To Trade This Event Risk

Bullish USD Trade: Consumer Confidence Climbs to 82.0 or Higher

• 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: Household Sentiment Unexpectedly Falters

• 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

• Stalls at Trendline Support, 61.8% Fib Expansion- Higher High in Place?
• Break of Bullish RSI Momentum to Highlight Near-Term Correction
• Interim Resistance: 1.3960-70 (61.8% expansion)
• Interim Support: 1.3600 Pivot to 1.3620 (23.6 retracement)

Impact that the U. of Michigan Confidence 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)
FEB P 2014	02/14/2014 14:45 GMT	80.2	81.2	-7	flat

Previous U. of Michigan Confidence Survey :

The University of Michigan confidence survey for February came in better than expected and the revision later in the month edged up higher to 81.6. Despite the beat, price action in EUR/USD was limited and is likely to remain limited at the release so long that the figure does not largely deviate from expectations. Market sentiment remains preoccupied with much larger developments in the equity market in addition to geopolitical tensions and the week ahead comes with some key event risk including European CPI figures and the FOMC Rate Decision.

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

More...

- U.S. Consumer Price Index to Slow for First Time in Four-Months
- Core Inflation to Hold Steady at Annualized 1.6%

Trading the News: U.S. Consumer Price Index

A slowdown in the headline reading for U.S. inflation may prompt further declines in the dollar as it dampens the interest rate outlook for the world’s largest economy..

Why Is This Event Important:

Even though the Federal Open Market Committee (FOMC) is widely expected to discuss another $10B taper in March, the central bank remains poised to introduce a ‘qualitative approach’ for monetary policy, and a dovish twist to the forward-guidance may heighten the bearish sentiment surrounding the reserve currency as Fed Chair Janet Yellen remains reluctant to halt the zero-interest rate policy (ZIRP).

Expectations: Bearish Argument/Scenario

Release	Expected	Actual
Producer Price Index (YoY) (FEB)	1.2%	0.9%
Consumer Credit (JAN)	$14.000B	$13.698B
Consumer Confidence (FEB)	80.0	78.1

Slowing input costs paired with the downturn in consumer confidence may prompt businesses to engage in discounting, and a dismal CPI print may trigger a bearish reaction in the USD as it raises the threat for disinflation.

Risk: Bullish Argument/Scenario

Release	Expected	Actual
Advance Retail Sales (MoM) (FEB)	0.2%	0.3%
Average Hourly Earnings (YoY) (FEB)	2.0%	2.2%
Personal Income (JAN)	0.2%	0.3%

However, U.S. firms may raise consumer prices amid the pickup in wage growth along with the resilience in private sector spending, and a stronger-than-expected inflation print may generate a near-term bounce in the greenback as it puts increased pressure on the Fed to normalize monetary policy sooner rather than later.

How To Trade This Event Risk

Bearish USD Trade: Consumer Prices Slow to 1.2% or Lower

• Need to see green, five-minute candle following the release to consider a short dollar trade
• If market reaction favors a long EURUSD position, sell pair 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 objective

Bullish USD Trade: Inflation Beats Market Forecast

• Need red, five-minute candle to favor a long dollar trade
• Implement same setup as the bearish USD trade, just in reverse

Potential Price Targets For The Release

EURUSD Daily

• Failure to Close Above 1.3960-70 to Confirm Higher High is in Place
• Break of Bullish RSI Momentum to Highlight Near-Term Correction
• Interim Resistance: 1.3960-70 (61.8% expansion)
• Interim Support: 1.3600 Pivot to 1.3620 (23.6 retracement)

Impact that the U.S. Consumer Price Index 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	02/20/2013 13:30 GMT	1.6%	1.6%	+16	+15

EURUSD M5 : 22 pips price movement by USD - CPI news event :

Price action was limited at the release of US CPI figures for January, but the 16 pip gain at the release held into the daily close. We saw the Euro fall off sharply earlier in the European session as PMI numbers came in generally weaker across the board. It may be the case that we see a generally slow session as market participants await Wednesday’s FOMC event risk. As for insight into this print, it is notable that fuel costs were above average for the month of February as WTI Crude topped $105 a barrel.

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

More...

- U.K. Jobless Claims to Contract for Sixteen-Consecutive Month
- ILO Unemployment Rate to Hold at 7.2% for Second Month

Trading the News: U.K. Jobless Claims Change

Another 25.0K decline in U.K. Jobless Claims may prompt a meaningful rebound in the GBPUSD as it raises the Bank of England’s (BoE) scope to normalize monetary policy sooner rather than later.

Why Is This Event Important:

However, the BoE Minutes may limit the market reaction should the central bank shift its tone for monetary policy, and the British Pound may face a larger correction over the near-term if the developments coming out of the U.K. drag on interest rate expectations.

Expectations: Bullish Argument/Scenario

Release	Expected	Actual
Construction Output s.a. (MoM) (JAN)	1.5%	1.8%
Manufacturing Production (MoM) (JAN)	0.3%	0.4%
Purchasing Manager Index- Manufacturing (FEB)	56.8	56.9

The pickup in business outputs along with the ongoing expansion in building activity may prompt a sharp decline in U.K. Jobless Claims, and a positive print may heighten the bullish sentiment surrounding the British Pound as it raises the outlook for growth and inflation.

Risk: Bearish Argument/Scenario

Release	Expected	Actual
Visible Trade Balance (JAN)	-8.600B	-9.793B
Private Consumption (QoQ) (4Q P)	0.6%	0.4%
Retail Sales ex Auto (MoM) (JAN)	-1.2%	-1.5%

However, we may see businesses scale back on hiring amid the slowdown in private sector consumption paired with the widening trade deficit, and a dismal development may spur a further decline in the GBPUSD as BoE Governor Mark Carney warns of the spare capacity in the real economy.

How To Trade This Event Risk

Bullish GBP Trade: Jobless Claims Decline 25.0K+, Unemployment Falls Back to 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. Job Growth 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 Daily

• Fails to Close Above 1.6600; Close Below Support to Open Door for 1.6400 Handle
• Relative Strength Index Looks to Threaten Bullish Trend
• Interim Resistance: 1.6850-60 (78.6% expansion)
• Interim Support: 1.6540 (38.2% expansion) to 1.6550 (78.6% 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)
JAN 2014	02/19/2014 9:30 GMT	-20.0K	-27.6K	-45	-37

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

U.K. Jobless Claims contracted another 27.6 K in January following a revised 27.7K drop the month prior, while the Unemployment Rate using the International Labour Organization’s methodology unexpectedly advanced to 7.2% from 7.1%. Despite the larger-than-expected decline in jobless claims, the surprise uptick in the jobless rate pushed the GBPUSD below the 1.6660 region, but the British Pound pared the decline going into the close as the pair ended the day at 1.6677.

--- Written by David Song, Currency Analyst



More...

-Federal Open Market Committee (FOMC) to Deliver Another $10B Taper.
- Fed Chair Janet Yellen to Hold Press Conference at 18:30 GMT.

Trading the News: Federal Open Market Committee Meeting

Indeed, the Federal Open Market Committee (FOMC) is widely anticipated to reduce its asset-purchase by another $10B in March, but the market reaction may not be as clear cut as the previous rate decisions as market participants expect a material shift in the policy outlook.

What’s Expected:

Why Is This Event Important:

Indeed, a growing number of Fed officials have highlight a new ‘qualitative’ approach for monetary as the jobless rate approaches the 6.5% threshold for unemployment, while a dovish twist to the central bank’s forward guidance may heighten the bearish sentiment surrounding the greenback as it drags on interest rate expectations.

Expectations: Bullish Argument/Scenario

Release	Expected	Actual
Advance Retail Sales (MoM) (FEB)	0.2%	0.3%
Change in Non-Farm Payrolls (FEB)	149K	175K
Personal Spending (JAN)	0.2%	0.3%

The Fed may show a greater willingness to normalize monetary policy sooner rather than later amid the resilience in private sector consumption along with the ongoing improvement in the labor market, and a less-dovish policy statement may spur a marked rebound in the dollar as the fundamental outlook for the U.S. economy improves.

Risk: Bearish Argument/Scenario

Release	Expected	Actual
Consumer Price Index (YoY) (FEB)	1.2%	1.1%
U. of Michigan Confidence (MAR P)	82.0	79.9
Producer Price Index (YoY) (FEB)	1.2%	0.9%

However, the threat for disinflation may encourage Chair Janet Yellen to retain the zero-interest rate policy for an extended period of time, and the reserve currency may face further headwinds over the near-term should the central bank see the recent slowdown in economic activity carry beyond the winter months.

How To Trade This Event Risk

Bullish USD Trade: FOMC Cuts Another $10B & Sees Greater Scope to Normalize

• Need red, five-minute candle following the release to consider a short EUR/USD trade
• If market reaction favors a long dollar trade, short EUR/USD 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 Implements Dovish Twist to Forward Guidance

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

Potential Price Targets For The Rate Decision

FOMC NEWS - EUR/USD Daily

• Failure to Break Monthly Range Will Suggest Higher High is in Place
• Need Downside Break in Relative Strength Index to Look for Lower High in Price
• Interim Resistance: 1.3960-70 (61.8% expansion)
• Interim Support: 1.3800 (100.0% expansion) to 1.3830 (61.8% retracement)

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)
JAN 2014	01/29/2013 19:00 GMT	0.25%	0.25%	+4	-106

January 2014 Federal Open Market Committee Interest Rate Decision

As expected, the Federal Reserve reduced its asset purchase program by $10B in January leaving the total monthly purchase total to $65B per month. Although we did not have a February FOMC meeting, plenty of Fed rhetoric that included Yellen’s testimony on capitol hill all but confirmed we will see another taper at the March meeting. As has been stated by one FOMC member after another, excluding any major financial disruption it is likely that we will continue to see a $10B taper per month with the QE3 program coming to an end by the end of the fourth 2014 quarter. Yellen’s first presser at 18:30GMT as Fed chair could provide market participants with insight in regards to policy moving forward in 2014.

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

More...

- Canada Consumer Prices to Slow for First Time Since October.
- Core Inflation to Slips to 1.1%- Matching Lowest Reading for 2013.

Trading the News: Canada Consumer Price Index

A marked decline in Canada inflation may prompt a further advance in the USD/CAD as it raises the Bank of Canada’s (BoC) scope to revert back to its easing cycle.

What’s Expected:

Why Is This Event Important:

Indeed, BoC Governor Stephen Poloz showed a greater willingness to lower the benchmark interest rate further in an effort to encourage a ‘soft landing’ for the region, and the ongoing threat for disinflation may continue to dampen the outlook for the Canadian dollar as the central bank adopts a more dovish tone for monetary policy.

Expectations: Bearish Argument/Scenario

Release	Expected	Actual
Net Change in Employment (FEB)	15.0K	-7.0K
Gross Domestic Product (MoM) (DEC)	-0.3%	-0.5%
Retail Sales (MoM) (DEC)	-0.4%	-1.8%

The persistent slack in the real economy may continue to drag on price growth as Governor Poloz softens his outlook for growth, and a marked slowdown in inflation may continue to push the USD/CAD to fresh monthly highs as it fuels bets for a rate cut.

Risk: Bullish Argument/Scenario

Release	Expected	Actual
New Home Price Index (YoY) (JAN)	1.3%	1.5%
Raw Materials Price Index (MoM) (JAN)	1.5%	2.6%
Industrial Product Price (MoM) (JAN)	0.5%	1.4%

Nevertheless, higher home prices along with rising input costs may limit the downside risk for price growth, and a positive development may generate a near-term rebound in the loonie as it raises the fundamental outlook for the Canadian economy.

How To Trade This Event Risk

Bearish CAD Trade: Price Growth Slips to 1.0% or Lower

• Need green, five-minute candle after the CPI report to consider long USD/CAD entry
• If the market reaction favors a bearish 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: Canada Inflation Tops Market Forecast

• Need red, five-minute candle following the release to look at a short USD/CAD trade
• Carry out the same setup as the bearish loonie trade, just in the opposite direction

Potential Price Targets For The Release

USD/CAD Daily

• Looking for Higher High Following Breakout of Triangle/Wedge Formation
• Relative Strength Index Retains Bullish Trend Carried Over from 2013
• Interim Resistance: 1.1310 Pivot to 1.1320 (61.8% expansion)
• Interim Support: 1.1050 (50.0% retracement) to 1.1070 (23.6% 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)
JAN 2014	02/21/2014 13:30 GMT	1.3%	1.5%	-42	-60

January 2014 Canada Consumer Price Index :

The Canadian Dollar saw slight strength at the CPI print encompassing prices in January as the YoY figure came in at 1.5% vs. economist estimates of 1.3%. The spike higher in USD/CAD at the release set a high not broken until this past Wednesday’s FOMC Rate Decision. At Yellen’s presser we saw USD/CAD hit highs not seen since 2009 as it rocketed passed the 1.12 level. If we see any weakness here below economist expectations, more fundamental fire will fuel the 2014 breakout.

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

More...

- U.K. Consumer Price Index (CPI) to Narrow for Fifth Consecutive Month.
- Core Inflation to Hold Steady at 1.6%- Lowest Reading Since November 2009.

Trading the News: U.K. Consumer Price Index

A further slowdown in U.K. inflation may generate a further decline in the GBP/USD as it limits the Bank of England’s (BoE) scope to normalize monetary policy sooner rather than later.

Why Is This Event Important:

Indeed, the upcoming shuffle in the Monetary Policy Committee (MPC) may spark a material shift in the policy outlook as the central bank continues to assess the underlying slack in the real economy, but it seems as though Governor Mark Carney will do little to halt the appreciation in the British Pound as it helps to balance the risks surrounding the region.

Expectations: Bearish Argument/Scenario

Release	Expected	Actual
BRC Shop Price Index (YoY) (FEB)	-1.1%	-1.4%
Private Consumption (QoQ) (4Q P)	0.6%	0.4%
Retail Sales ex Auto (MoM) (JAN)	-1.2%	-1.5%

U.K. Consumer Prices may weaken further in February amid the slowdown in private consumption, and a dismal inflation print may
threaten the bullish sentiment surrounding the sterling as it weighs on interest rate expectations.

Risk: Bullish Argument/Scenario

Release	Expected	Actual
Average Weekly Earnings ex Bonus (3MoY) (JAN)	1.2%	1.3%
Halifax House Prices (3MoY) (FEB)	7.3%	7.9%
Producer Price Index- Output n.s.a. (YoY) (JAN)	0.7%	0.9%

Nevertheless, higher home prices paired with the uptick in wage growth may limit the risk of seeing a material slowdown in U.K. inflation, and a better-than-expected CPI print may spur a near-term rebound in the GBP/USD as the pair continues to carve a series of higher highs & higher lows.

How To Trade This Event Risk

Bearish GBP Trade: U.K. CPI Narrows to 1.7% or Lower

• Need red, five-minute candle following the release to consider a short British Pound trade.
• If market reaction favors selling sterling, short GBP/USD with two separate positions.
• 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.

Bullish GBP Trade: Headline Inflation Tops Market Forecast

• Need green, five-minute candle to favor a long GBP/USD trade.
• Implement same setup as the bearish British Pound trade, just in opposite direction.

Potential Price Targets For The Release
GBP/USD Daily

• Watching 1.6400 for Lower High; Break Below Would Negative Bullish Bias.
• Bearish Relative Strength Index Highlights Downside Targets.
• Interim Resistance: 1.6850-60 (78.6% expansion).
• Interim Support: 1.6400 (61.8% expansion) to 1.6430 (23.6% expansion).

Impact that the U.K. CPI 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)
JAN 2014	02/18/2014 9:30 GMT	2.0%	1.9%	+3	-2

U.K. Consumer Prices grew an annualized 1.9% in January to mark the slowest pace of growth since November 2009, with the core rate of inflation narrowing to 1.6% from 1.7% the month prior. The initial reaction to the weaker-than-expected print was short-lived as the GBP/USD climbed back above the 1.6700 handle, but the sterling struggled to hold its ground during the North American trade as the pair closed at 1.6680.

--- Written by David Song, Currency Analyst

More...

- U.S. Durable Goods Orders to Increase for First Time Since November
- Non-Defense Capital Goods Orders to Rise for Second Straight Month

Trading the News: U.S. Durable Goods Orders

2013-03-26 12:30 GMT (or 13:30 MQ MT5 time) | [USD - Durable Goods Orders]

A 1.0% rebound in U.S. Durable Goods Orders may prompt a bullish reaction in the dollar as it raises the outlook for growth and inflation.

Why Is This Event Important:

Indeed, prospects for a stronger recovery may encourage the Federal Open Market Committee (FOMC) to normalize policy sooner rather than later, and we may see Fed Chair Janet Yellen continue to soften her dovish tone for monetary policy as a growing number of central bank officials see a stronger recovery in 2014.

Expectations: Bullish Argument/Scenario

Release	Expected	Actual
Advance Retail Sales (FEB)	0.2%	0.3%
Average Hourly Earnings (YoY) (FEB)	2.0%	2.2%
Personal Income (JAN)	0.2%	0.3%

Faster wage growth along with the resilience in household consumption may boost demands for large-ticket items, and a positive print may encourage a bullish outlook for the USD as the Fed moves away from its easing cycle.

Risk: Bearish Argument/Scenario

Release	Expected	Actual
U. of Michigan Confidence (MAR P)	82.0	79.9
Consumer Credit (JAN)	$14.000B	$13.698B
NFIB Small Business Optimism (FEB)	93.8	91.4

However, the slowdown in private sector credit paired with the pullback in consumer confidence may generate a dismal release, and another decline in U.S. Durable Goods Orders may trigger a selloff in the greenback as it limits the Fed’s scope to remove the zero-interest rate policy (ZIRP) later this year or in early 2015.

How To Trade This Event Risk

Bullish USD Trade: Demands Increase 1.0% or Greater

• Need to see red, five-minute candle following the release to consider a long dollar trade
• If market reaction favors a short EURUSD position, sell pair 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 objective

Bullish USD Trade: Durable Goods Orders Disappoint

• Need green, five-minute candle to favor a short dollar trade
• Implement same setup as the bullish USD trade, just in reverse

Potential Price Targets For The Release

EURUSD Daily

• At Risk for Larger Correction Following Higher High (1.3965); Higher Low on Tap?
• Interim Resistance: 1.3960-70 (61.8% expansion)
• Interim Support: 1.3600 Pivot to 1.3620 (23.6 retracement)

Impact that the U.S. Durable Goods Orders 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	02/27/2013 13:30 GMT	-1.7%	-1.0%	+15	+50

Demands for large-ticket items decline another 1.0% in January following a revised 5.3% drop the month prior, while Non-Defense Capital Goods Orders excluding Aircrafts, a proxy for business investments, unexpectedly increased 1.7% amid forecasts for a 0.2% contraction. Nevertheless, the initial reaction to the data print was short-lived, with the EURUSD coming off of the 1.3650 region, and the reserve currency continued to lose ground throughout the North American trade as the pair closed at 1.3708.

--- Written by David Song, Currency Analyst

More...

- European Central Bank (ECB)to Hold Benchmark Interest Rate at 0.25%.
- ECB President Mario Draghi to Deliver Policy Statement at 12:30 GMT.

Trading the News: European Central Bank Interest Rate Decision

According to a Bloomberg News survey, 54 of the 57 economists polled see the European Central Bank (ECB) sticking to the sidelines in April, but the market speculation (rate cut, negative deposit rates, verbal intervention, unsterilized bond purchases, Long-Term Refinancing Operation) surrounding the interest rate decision may spark increased volatility in the EUR/USD as market participants weigh the outlook for monetary policy.

What’s Expected:

Why Is This Event Important:

The EUR/USD may push higher over the remainder of the week should the ECB merely reiterate the policy statement from the March 6 meeting, but the single currency may continue to give back the rally from earlier this year should central bank President Mario Draghi lay the groundwork to implement more non-standard measures across the monetary union.

Expectations: Bearish Argument/Scenario

Release	Expected	Actual
Euro-Zone Producer Price Index (YoY) (FEB)	-1.6%	-1.7%
Euro-Zone Consumer Price Index Estimate (YoY) (MAR)	0.6%	0.5%
Euro-Zone Industrial Production s.a. (MoM) (JAN)	0.5%	-0.2%

Indeed, the heightening risk for deflation may put increased pressure on the ECB to further embark on its easing cycle, and the EUR may face a larger decline in the coming days should the central bank take additional steps to shore up the ailing economy.

Risk: Bullish Argument/Scenario

Release	Expected	Actual
Euro-Zone Unemployment Rate (FEB)	12.0%	11.9%
Euro-Zone Economic Confidence (MAR)	101.4	102.4
Euro-Zone Retail Sales (MoM) (JAN)	0.8%	1.6%

However, President Mario Draghi may retain a rather neutral tone for monetary policy amid the positive developments coming out of the euro-area, and the EURUSD may continue to carve a series of higher highs & higher lows as the central bank remains reluctant to move away from its current policy.

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 Implements More Easing/Draghi Adopts Dovish Tone

• Need red, five-minute candle following the decision/statement to consider a short Euro trade
• If market reaction favors a short trade, sell EUR/USD 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 Retains Neutral Outlook

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

Potential Price Targets For The Rate Decision
EUR/USD Daily

• Looking for Higher Low, But Break Below 1.3500 Would Negative Bullish Trend
• Interim Resistance: 1.3960-70 (61.8 expansion)
• Interim Support: 1.3600 Pivot to 1.3620 (23.6 retracement)

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)
MAR 2014	03/06/2014 12:45 GMT	0.25%	0.25%	+68	+114

European Central Bank (ECB) March 2014 Interest Rate Decision - EURUSD M5 : 46 pips price range movement by EUR - Interest Rate news event :

At last month’s European Central Bank Rate Decision and Draghi presser we saw the central bank release updated forecasts for 2015 and 2014 as well as new forecasts for a myriad of figures for 2016. Although a nod from German courts for OMT actions from the central bank had led some to believe some sort of action would be taken, the fact that this did not occur and the fact that Mr. Draghi remained upbeat sent the Euro to highs near the 1.40 mark over the following few days. As for insight into this meeting, recent inflation figures out of the EU have remained subdued and these challenges may push the central bank to take some sort of action whether it be verbal intervention to weaken the Euro or a move to lower the overnight rate by 10-15bps. Any actions of greater significance may be unlikely due to the complexities of any ‘QE’ style move from the central bank.

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

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- U.S. Non-Farm Payrolls (NFP) to Increase 200K; Unemployment Rate to Slip to 6.6%.
- February NFP Exceeded Market Expectations for First Time in Three-Months.

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

The U.S. Non-Farm Payrolls (NFP) report may in still a bullish outlook for the dollar (bearish EUR/USD) as employment is expected to increase another 200K in March, while the jobless rate is anticipated to narrow to an annualized 6.6% from 6.7%.

What’s Expected:

Why Is This Event Important:

Indeed, a material pickup in job growth may put increased pressure on the Federal Open Market Committee (FOMC) to normalize monetary policy sooner rather than later, but the reserve currency may struggle to hold its ground should the NFP report dampen the outlook for growth and inflation.

Expectations: Bullish Argument/Scenario

Release	Expected	Actual
Challenger Job Cuts (YoY) (MAR)	--	-30.2%
Durable Goods Orders (FEB)	0.8%	2.2%
Advance Retail Sales (MoM) (FEB)	0.2%	0.3%

The resilience in private sector consumption along with the ongoing decline in planned job cuts may generate a positive employment report, and a large uptick in job growth may highlight an improved forecast for the USD as the Fed continues to see a stronger recovery in 2014.

Risk: Bearish Argument/Scenario

Release	Expected	Actual
ADP Employment Change (MAR)	195K	191K
ISM Manufacturing- Employment (MAR)	--	51.1
NFIB Small Business Optimism (FEB)	93.8	91.4

Nevertheless, the persistent slack in the real economy paired with the downtick in business confidence may drag on NFPs, and a dismal print may trigger a sharp selloff in the greenback as it weighs on interest rate expectations.

How To Trade This Event Risk

Bullish USD Trade: NFP Climb 200K+; Unemployment Slips to 6.6%

• Need to see red, five-minute candle following the NFP print to consider a short trade on EUR/USD
• If market reaction favors a long dollar trade, sell EUR/USD 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: March Employment Disappoints

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

Potential Price Targets For The Release
EUR/USD Daily

• Risks Larger Correction After Failed Attempts to Close Above 1.3800
• Relative Strength Index Carving Bearish Trend
• Interim Resistance: 1.3960-70 (61.8 expansion)
• Interim Support: 1.3650 (78.6% expansion) to 1.3660 (61.8 retracement)

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)
FEB 2014	3/07/2013 13:30 GMT	149K	175K	-29	-13

U.S. Non-Farm Payrolls (NFP) February 2014

At the February release of the US Non-Farm Payroll Change we saw USDollar gain against the Euro as the print came in 26K higher than economist estimates and the January print was revised upwards to 129K from 113K prior. Current surveys point to another better than expected print with estimates at 200K for March. We did see a slight miss for the ADP figure on Wednesday, although it is not uncommon to see the NFP figure beat or miss with a larger range. If the print misses expectations, it will be difficult to place blame on the weather once more as has been the case since December.

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

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- Bank of England (BoE) to Keep Rate at 0.50%, Asset-Purchase Facility at GBP 375B.
- Monetary Policy Committee (MPC) Meeting Minutes Due Out on April 23.

Trading the News: Bank of England (BoE) Interest Rate Decision

The Bank of England (BoE) interest rate decision may generate fresh highs in the GBP/USD should we see a growing number of central bank officials show a greater willingness to normalize monetary policy sooner rather than later.

Why Is This Event Important:

Indeed, BoE Governor Mark Carney argued the first rate hike may come before the general election in May 2015 amid the stronger recovery in the U.K., and a further shift in the policy outlook should continue to heighten the bullish sentiment surrounding the British Pound as the central bank moves away from its easing cycle.

Expectations: Bullish Argument/Scenario

Release	Expected	Actual
Manufacturing Production (MoM) (FEB)	0.3%	1.0%
Retail Sales ex Auto (MoM) (FEB)	0.3%	1.8%
Consumer Price Index Core (YoY) (FEB)	1.6%	1.7%

Sticky prices paired with the pickup in household & business activity may push the BoE to adopt a more hawkish tone for monetary policy, and the policy meeting may trigger a bullish reaction in the GBP/USD should the central bank lay out a more detailed exit strategy.

Risk: Bearish Argument/Scenario

Release	Expected	Actual
Mortgage Approvals (FEB)	75.3K	70.3K
Net Consumer Credit (FEB)	0.7B	0.6B
BBA Loans for Home Purchases (FEB)	50.0K	47.6K

However, the BoE may merely reiterate the policy statement from the March 6 meeting as the central bank continues to assess the margin of slack in the real economy, and the British Pound may face a near-term correction should the MPC meeting drag on interest rate expectations.

How To Trade This Event Risk

Bullish GBP Trade: BoE Sounds More Hawkish/Lays Out Detailed Exit Strategy

• Need green, five-minute candle following the meeting to consider a long British Pound trade
• If market reaction favors a bullish sterling trade, long GBP/USD 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: MPC Talks Down Interest Rate Expectations

• Need red, five-minute candle to favor a short GBP/USD trade
• Implement same setup as the bullish British Pound trade, just in reverse

Potential Price Targets For The Release
GBP/USD Daily Chart

GBP/USD H4 Chart

• Bullish RSI Break Raises Risk for Higher High
• Interim Resistance: 1.6850-60 (78.6% expansion)
• Interim Support: 1.6400 (61.8% expansion) to 1.6430 (23.6% expansion)

Impact that the BoE Interest Rate Decision has had on GBP during the last meeting

Period	Data Released	Estimate	Actual	Pips Change (1 Hour post event )	Pips Change (End of Day post event)
MAR 2014	03/06/2014 12:00 GMT	0.50%	0.50%	-23	+12

Bank of England (BoE) Interest Rate Decision March 2014
GBPUSD M5 : 38 pips range price movement by GBP - Interest Rate news event :

The Bank of England interest rate decision came and went once again in its usual fashion. As has become the norm, a quick spike in GBP was followed by an equally fast pullback. As this meeting does not proceed the ECB, we may see greater follow through, especially in the EURGBP cross.

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

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