Trading News Events

- U. of Michigan Confidence to Improve for Second Consecutive Month.
- Print of 84.5 Would Mark the Highest Reading Since July.

Trading the News: U. of Michigan Confidence

A second straight rise in the U. of Michigan Confidence survey may spur a further decline in the EUR/USD as the ongoing improvement in the world’s largest economy puts increased pressure on the Federal Reserve to normalize monetary policy sooner rather than later.

What’s Expected:

Why Is This Event Important:

Despite expectations for a rate hike in 2015, a further pickup in household sentiment may undermine the Fed’s scope to retain the zero-interest rate policy (ZIRP) well into the following year, and a positive development may help to paint a more bullish outlook for the dollar as it raises the outlook for growth and inflation.

Expectations: Bullish Argument/Scenario

Release	Expected	Actual
Consumer Credit (MAR)	$15.500B	$17.529B
Change in Non-Farm Payrolls (APR)	218K	288K
ADP Employment Change (APR)	210K	220K

The ongoing improvement in the labor market along with the expansion in private sector lending may encourage a further pickup in consumer sentiment, and a better-than-expected print may generate a more bearish outlook for the EUR/USD as it raises the prospects for a stronger recovery.

Risk: Bearish Argument/Scenario

Release	Expected	Actual
Consumer Price Index Core (YoY) (APR)	1.7%	1.8%
Average Hourly Earnings (YoY) (APR)	2.1%	1.9%
Personal Consumption Expenditure Core (YoY) (MAR)	1.2%	1.2%

However, sticky inflation paired with subdued wage growth may drag household confidence, and a dismal U. of Michigan release may spur a more meaningful rebound in the EUR/USD as drags on interest rate expectations.

How To Trade This Event Risk

Bullish USD Trade: U. of Michigan Survey Advances to 84.5 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 Confidence 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
EUR/USD Daily

• Fails to Retain Bullish RSI Momentum- Close Below Support to Favor Bearish Outlook
• Interim Resistance: 1.3960-70 (61.8% expansion)
• Interim Support: 1.3650 (78.6 expansion) to 1.3660 (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)
APR P 2014	04/11/2014 13:55 GMT	81.0	82.6	+7	+8

The University of Michigan Confidence survey beat estimates last month coming in at 82.6 vs. 81.0 expected. The figure has failed to break 86 since 2007. Although not a large market mover, any major deviation from expectations could add to pressure on the greenback.

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

More...

- U.K. Consumer Price Index (CPI) to Increase for First Time in 2014.
- Core Inflation to Rise 1.8%- Fastest Rate of Growth Since November.

Trading the News: U.K. Consumer Price Index

A marked rebound in the U.K.’s Consumer Price Index (CPI) may pave the way for fresh highs in the GBP/USD as it puts increased pressure on the Bank of England (BoE) to normalize monetary policy sooner rather than later.

What’s Expected:

Why Is This Event Important:

Indeed, the BoE Minutes may reveal a growing dissent within the Monetary Policy Committee (MPC) as U.K. officials anticipate a stronger recovery in 2014, and heightening price pressures may boost the bullish sentiment surrounding the British Pound as it spurs a more material shift in the policy outlook.

Expectations: Bullish Argument/Scenario

Release	Expected	Actual
Net Consumer Credit (MAR)	0.6B	1.1B
GfK Consumer Confidence (APR)	-4	-3
Retail Sales inc. Auto (MoM) (MAR)	-0.4%	0.1%

The ongoing pickup in household sentiment along with the resilience in retail sales may push U.K. firms to ramp up consumer prices, and a sharp uptick in the headline reading for inflation should foster a bullish reaction in the GBP/USD as it fuels interest rate expectations.

Risk: Bearish Argument/Scenario

Release	Expected	Actual
Jobless Claims Change (APR)	-30.0K	-25.1K
BRC Shop Price Index (YoY) (APR)	-0.8%	-1.4%
Mortgage Approvals (MAR)	72.0K	67.1K

Nevertheless, efforts to cool the house paired with the persistent slack in the real economy may continue to dampen the outlook for price growth, and a dismal CPI print may generate a larger correction in the GBP/USD as market participants scale back bets of seeing higher borrowing costs ahead of schedule.

How To Trade This Event Risk

Bullish GBP Trade: U.K. CPI Climbs 1.7% or Higher

• Need green, five-minute candle following the release to consider a long British Pound trade
• If market reaction favors buying sterling, go 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: Headline Reading for Inflation Disappoints

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

Potential Price Targets For The Release
GBP/USD Daily

• Retains Ascending Channel from 2013- Higher Low in Place?
• Interim Resistance: 1.7000 Pivot to 1.7030 (100.0% expansion)
• Interim Support: 1.6730 (61.8% expansion) to 1.6720 (50.0% retracement)

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)
MAR 2014	04/15/2014 8:30 GMT	1.6%	1.6%	+69	+65

March 2014 U.K. Consumer Price Index
GBPUSD M5 : 60 pips price movement by GBP - CPI news event

U.K. consumer prices increased an annualized 1.6% in March after expanding 1.7% the month prior, while the core rate of inflation grew 1.6% during the same period to match the slowest pace of growth for 2014. Despite the slowdown, the in-line CPI prints pushed the GBP/USD back above the 1.7000, with the pair ending the day at 1.6723.

--- Written by David Song, Currency Analyst

More...

- Bank of England (BoE) to Reiterate Updated Growth & Inflation Forecast
- Is There a Growing Dissent in the Monetary Policy Committee (MPC)?

Trading the News: Bank of England Minutes

The Bank of England Minutes may generate a more meaningful advance 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.

What’s Expected:

Why Is This Event Important:

The policy statement may show a growing dissent within the BoE as the fundamental developments coming out of the U.K. raise the prospects for a stronger recovery, and the fresh batch of central bank rhetoric may pave the way for fresh highs in the GBP/USD should the committee adopt a more hawkish tone for monetary policy.

Expectations: Bullish Argument/Scenario

Release	Expected	Actual
Consumer Price Index Core (YoY) (APR)	1.8%	2.0%
Manufacturing Production (MoM) (MAR)	0.3%	0.5%
Retail Sales inc. Auto (MoM) (MAR)	-0.4%	0.1%

Sticky price pressures paired with the ongoing pickup in private sector activity may put increased pressure on the BoE to raise the benchmark interest rate ahead of schedule, and the GBP/USD may continue to carve higher highs & higher lows in the second-half of the year as the central bank moves away from its easing cycle.

Risk: Bearish Argument/Scenario

Release	Expected	Actual
Jobless Claims Change (APR)	-30.0K	-25.1K
Mortgage Approvals (MAR)	72.0K	67.1K
Gross Domestic Product (QoQ) (1Q A)	0.9%	0.8%

However, the persistent slack in the real economy may keep the BoE on the sidelines as Governor Mark Carney retains a cautious outlook for the region, and the GBP/USD may face a larger correction in the days ahead should the policy statement drag on interest rate expectations.

How To Trade This Event Risk

Bullish GBP Trade: BoE Shows Greater Willingness to Normalize Policy

• Need green, five-minute candle following a hawkish statement to favor a long British Pound trade
• If reaction favors buying British Pound, long GBP/USD 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: MPC Retains Neutral Bias for Policy Outlook

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

Potential Price Targets For The Release
GBP/USD Daily

• Outlook Remains Bullish as Pair Carves Higher Low in May
• Interim Resistance: 1.7000 Pivot to 1.7030 (100.0% expansion)
• Interim Support: Interim Support: 1.6730 (61.8% expansion) to 1.6720 (50.0% retracement)

Period	Data Released	Estimate	Actual	Pips Change (1 Hour post event )	Pips Change (End of Day post event)
APR 2014	04/23/2014 8:30 GMT	--	--	-11	-38

The BoE voted unanimously to retain its current policy in April as the central bank sees a stronger recovery in 2014, but the British Pound failed to benefit from the meeting minutes as the MPC talked down the threat for inflation. In turn, the GBP/USD slipped back below the 1.6800 handle, with the pair trailing lower throughout the North American trade to end the day at 1.6779.

--- Written by David Song, Currency Analyst

More...

- Canada Consumer Price Reading of 2.0% Will Mark Highest Price Since April 2012.
- Core Rate of Inflation to Increase for Third Time in 2014.

Trading the News: Canada Consumer Price Index

A sharp rebound in Canada’s Consumer Price Index (CPI) may generate a larger pullback in the USD/CAD as the pair struggles to push back above former support around 1.0930-40.

What’s Expected:

Why Is This Event Important:

Despite the dovish tone for monetary policy, heightening price pressures may limit the Bank of Canada’s (BoC) scope to further embark on its easing cycle, and the bearish momentum in the USD/CAD may get carried into June should the data print prop up interest rate expectations.

Expectations: Bullish Argument/Scenario

Release	Expected	Actual
Existing Home Sales (MoM) (APR)	--	2.7%
New Housing Price Index (YoY) (MAR)	--	1.6%
Housing Starts (APR)	175.0K	194.8K

The ongoing recovery in private sector activity paired with the resilience in the housing market may spur a meaningful rebound in the CPI, and a stronger-than-expected inflation print may heighten the appeal of the Canadian dollar as it dampens expectations for a rate cut.

Risk: Bearish Argument/Scenario

Release	Expected	Actual
Retail Sales (MoM) (MAR)	0.3%	-0.1%
Wholesale Trade Sales (MoM) (MAR)	0.4%	-0.4%
Net Change in Employment (APR)	12.0K	-28.9K

However, firms may continue to offer discounted price amid the persistent weakness in the labor market along with the slowdown in private sector, and a dismal release may instill a more bullish outlook for the USD/CAD as it appears to be carving a higher-low in May.

How To Trade This Event Risk

Bullish CAD Trade: Headline Inflation Climbs 2.0% or Greater

• Need red, five-minute candle after the CPI report to consider short USD/CAD entry
• If the market reaction favors a bullish 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 Price Growth Falls Short of Market Forecast

• Need green, five-minute candle following the release to look at a long USD/CAD trade
• Carry out the same setup as the bullish loonie trade, just in reverse

Potential Price Targets For The Release
USD/CAD Daily

• Need Break of Bearish RSI Momentum to Favor Topside Targets
• Interim Resistance: 1.1000 (1.618% expansion) to 1.1020 (23.6% retracement)
• Interim Support: 1.0850 (61.8% retracement) to 1.0870 (100% expansion)

Impact that the Canada CPI 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)
MAR 2014	04/17/2014 12:30 GMT	1.4%	1.5%	-12	flat

March 2014 Canada Net Change in Employment
USDCAD : 13 pips price movement by CAD - CPI news event

The Canadian Dollar strengthened against the greenback following better than expect CPI for March. The print came in at a tenth of a percent higher, but CAD strength was quickly retraced by the end of the day. Although on a technical basis we may have set a USDCAD low, it may take weak CAD data and inflation coming in on the downside to prompt fundamental CAD selling.

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

More...

- U.S. GDP to Contract for First Time Since 1Q 2011
- Personal Consumption to Increase More Than 3% for Second Straight Quarter

Trading the News: U.S. Gross Domestic Product (GDP)

The preliminary U.S. 1Q GDP report may spur a near-term rebound in the EUR/USD as the growth rate is expected to contract 0.5% during the first three-months of 2014.

What’s Expected:

Why Is This Event Important:

Indeed, a marked downward revision may undermine the near-term rebound in the dollar as it gives the Federal Reserve greater scope to further delay its exit strategy, and the greenback may struggle to hold its ground ahead of the next policy meeting on June 18 should the data print drag on interest rate expectations.

Expectations: Bearish Argument/Scenario

Release	Expected	Actual
Consumer Price Index Core (YoY) (APR)	1.7%	1.8%
Average Hourly Earnings (YoY) (APR)	2.1%	1.9%
Personal Consumption Expenditure Core (YoY) (MAR)	1.2%	1.2%

Subdued wage growth paired with sticky inflation raises the risk of seeing a larger-than-expected contraction in the U.S. economy, and a dismal print may spark a rebound in the EUR/USD as the dampens the prospects for a stronger recovery in 2014.

Risk: Bullish Argument/Scenario

Release	Expected	Actual
Durable Goods Orders (APR)	-0.7%	0.8%
Change in Non-Farm Payrolls (APR)	218K	288K
Personal Spending (MAR)	0.6%	0.9%

Nevertheless, the resilience in private sector consumption paired with the ongoing improvement in the labor market may generate an upbeat GDP report, and a positive development may trigger fresh monthly lows in the EUR/USD as it raises the outlook for the U.S. economy.

How To Trade This Event Risk

Bearish USD Trade: U.S. Economy Contracts 0.5% or Greater

• Need to see green, five-minute candle following the release to consider a short dollar trade
• If market reaction favors a bearish dollar trade, sell EUR/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

Bullish USD Trade: 1Q GDP Exceeds Market Forecast

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

Potential Price Targets For The Release
EUR/USD Daily

• February Advance at Risk on Break Below 78.6% Retracement (1.3580)
• Interim Resistance: 1.3770 (38.2% expansion) to 1.3780 (38.2% retracement)
• Interim Support: 1.3490 (50.0% retracement) to 1.3500 Pivot

Impact that the U.S. GDP report has had on EUR/USD during the last quarter

Period	Data Released	Estimate	Actual	Pips Change (1 Hour post event )	Pips Change (End of Day post event)
4Q P 2013	02/28/2014 13:30 GMT	2.5%	2.4%

The preliminary 4Q GDP showed a downward revision in the growth rate, with the world’s largest economy expanding an annualized 2.4% during the last three-months of 2014, while Personal Consumption increased 2.6% during the same period after climbing 2.0% in the third-quarter. Despite the weaker-than-expected GDP print, the EUR/USD failed to hold above the 1.3800 handle during the U.S. trade, with the pair ending the day at 1.3798.

--- Written by David Song, Currency Analyst

More...

- Canada GDP to Slip Below 2% for First Time Since 4Q 2012.
- 2013 4Q GDP of 2.9% Marked the Fastest Face of Growth Since 3Q 2011.

Trading the News: Canada Gross Domestic Product (GDP)

Canada’s 1Q GDP report may spur a meaningful rebound in the USD/CAD should we see a marked slowdown in the growth rate.

What’s Expected:

Why Is This Event Important:

A dismal GDP report may instill a bearish outlook for the Canadian dollar as Bank of Canada (BoC) Governor Stephen Poloz keeps the door open to further reduce the benchmark interest rate, and the central bank head may continue to endorse a dovish outlook for monetary policy amid the persistent slack in the real economy.

Expectations: Bearish Argument/Scenario

Release	Expected	Actual
Retail Sales (MoM) (MAR)	0.3%	-0.1%
Wholesale Trade Sales (MoM) (MAR)	0.4%	-0.4%
Net Change in Employment (APR)	12.0K	-28.9K

The slowdown in private sector consumption along with the ongoing weakness in the labor market may spur a lackluster GDP print, and a dismal development may spur a bullish breakout in the USD/CAD as it raises bets for a BoC rate cut.

Risk: Bullish Argument/Scenario

Release	Expected	Actual
Average Weekly Earnings (YoY) (MAR)	--	3.1%
Existing Home Sales (MoM) (APR)	--	2.7%
Housing Starts (APR)	175.0K	194.8K

Nevertheless, the ongoing expansion in the housing market paired with the rebound in building activity may produce another GDP reading above 2.0%, and a better-than-expected print may generate a further decline in the USD/CAD as the pair remains the bearish trend carried over from March.

How To Trade This Event Risk

Bearish CAD Trade: Growth Rate Slips Below 2.0%

• Need green, five-minute candle following the GDP report to consider a 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 1Q GDP Exceeds Market Expectations

• 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 reverse

Potential Price Targets For The Release
USD/CAD Daily

• Remains at Risk for Fresh Lows as Price & RSI Retain Bearish Trend
• Interim Resistance: 1.1000 (1.618% expansion) to 1.1020 (23.6% retracement)
• Interim Support: 1.0710 (100.0% expansion) to 1.0730 (78.6% retracement)

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)
4Q 2013	02/28/2014 13:30 GMT	2.6%	2.9%	-17	-47

4Q 2013 Canada GDP
USDCAD M5 : 46 pips price movement by CAD - GDP news event

The Canadian economy grew at a faster pace during the last three-months of 2013, with the growth rising another 2.9% following the 2.7% advance in the third-quarter, and the data print may encourage an improved outlook for the Canadian dollar as it raises the outlook for growth and inflation. The USD/CAD slipped back below the 1.1100 handle following the stronger-than-expected GDP print, with the pair ending the day at 1.1064.

--- Written by David Song, Currency Analyst

More...

- European Central Bank Seen Implementing Rate Cut & Negative Deposit Rates.
- Will Governing Council Also Introduce Non-Standard Measures?

Trading the News: European Central Bank (ECB) Interest Rate Decision

The EUR/USD may face a sharp selloff over the next 24-hours of trade as market participants see the European Central Bank (ECB) pushing monetary policy into uncharted territory.

What’s Expected:

Why Is This Event Important:

Beyond expectations for a rate cut & negative deposit rates, the ECB may also look to implement more non-standard measures in an effort to increase lending to small-and-medium sized enterprises (SME), but the bearish sentiment surrounding the single-currency may end up being short-lived should central bank President Mario Draghi scale back his willingness to further embark on the easing cycle.

Expectations: Bearish Argument/Scenario

Release	Expected	Actual
Consumer Price Index (YoY) (MAY A)	0.6%	0.5%
M3 Money Supply (YoY) (APR)	1.1%	0.8%
Gross Domestic Product (QoQ) (1Q A)	0.4%	0.2%

The growing threat for deflation paired with the ongoing contraction in private sector credit may prompt the ECB to implement a range of tools to address the weakening outlook for the monetary union, and the EUR/USD may test fresh yearly lows over the near-term should central bank leave the door open for more easing.

Risk: Bullish Argument/Scenario

Release	Expected	Actual
Unemployment Rate (APR)	11.8%	11.7%
Economic Confidence (MAY)	102.2	102.7
Business Climate Indicator (MAY)	0.30	0.37

Nevertheless, the downtick in unemployment paired with improvement in confidence may encourage the ECB to further delay its easing cycle, and a rate cut alone may present a buying opportunity for the EUR/USD as market participants have already priced-in a reduction in the benchmark interest rate.

How To Trade This Event Risk

Bearish EUR Trade: ECB Cuts Rates & Keeps Door Open for More Monetary Easing

• Need red, five-minute candle following the statement to consider a short Euro position
• 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 Refrains from Implementing Non-Standard Measures

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

Potential Price Targets For The Release
EUR/USD Daily

• Broke Ascending Channel & Bullish RSI Momentum From 2013 Following Last ECB Meeting
• Interim Resistance: 1.3770 (38.2% expansion) to 1.3780 (38.2% retracement)
• Interim Support: 1.3490 (50.0% retracement) to 1.3500 Pivot

Impact that the ECB rate decision has had on EUR/USD during the last meeting

Period	Data Released	Estimate	Actual	Pips Change (1 Hour post event )	Pips Change (End of Day post event)
MAY	05/08/2014 11:45 GMT	0.25%	0.25%	+43	-94

May 2014 European Central Bank Interest Rate Decision
EURUSD M5 : 26 pips price movement by EUR - Interest Rate news event

The European Central Bank kept the benchmark interest rate on hold in May as the central bank continues to see a gradual recovery in the monetary union, but it seems as though the Governing Council is showing a greater willingness to implement additional monetary support in the coming months as President Mario Draghi highlights a greater risk for deflation. Despite the initial market reaction to the ECB rate decision, speculation for more easing dragged on the EUR/USD, with the pair closing the day at 1.3838.

--- Written by David Song, Currency Analyst

More...

- U.S. Non-Farm Payrolls (NFP) to Increase 200+K for Fourth Consecutive Month.
- 288K Print in April Marked the Highest Print Since January 2012.

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

U.S. Non-Farm Payrolls (NFP) are projected to increase another 215K in May, but the data print may spur a mixed reaction in the EUR/USD as the jobless rate is expected to widen to an annualized 6.4% from 6.3% the month prior.

What’s Expected:

Why Is This Event Important:

Despite the ongoing improvement in the labor market, it seems as though the Federal Open Market Committee (FOMC) will stick to its current approach at the June 18 meeting, and we would need to see a marked pickup in NFPs to see a material shift in the Fed’s policy outlook at Chair Janet Yellen remains in no rush to normalize monetary policy.

Expectations: Bullish Argument/Scenario

Release	Expected	Actual
ISM Non-Manufacturing (MAY)	55.5	56.3
Durable Goods Orders (APR)	-0.7%	0.8%
NFIB Small Business Optimism (APR)	94.5	95.2

The ongoing improvement in business sentiment along with the resilience in private sector consumption may encourage U.S. firms to further expand their labor force, and a positive development may spur a bullish reaction in the greenback as it puts increased pressure on the Fed to move away from its highly accommodative policy stance.

Risk: Bearish Argument/Scenario

Release	Expected	Actual
Challenger Job Cuts (YoY) (MAY)	--	45.5%
ADP Employment Change (MAY)	210K	179K
Gross Domestic Product (Annualized) (QoQ) (1Q P)	-0.5%	-1.0%

Nevertheless, the rise in planned job-cuts paired with the persistent slack in the real economy may ultimately generate a disappointing labor report, and a dismal print may heighten the bearish sentiment surrounding the reserve currency as it drags on interest rate expectations.

How To Trade This Event Risk

Bullish USD Trade: NFPs Climb 215K+; Unemployment Holds Steady

• 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: Job Growth, Jobless Rate Disappoint

• 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

• Failure to Close Above Former Support Favors Bearish Forecast
• Interim Resistance: 1.3770 (38.2% expansion) to 1.3780 (38.2% retracement)
• Interim Support: 1.3490 (50.0% retracement) to 1.3500 Pivot

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

Period	Data Released	Estimate	Actual	Pips Change (1 Hour post event )	Pips Change (End of Day post event)
APR 2014	5/2/2013 12:30 GMT	218K	288K	-47	+12

April 2014 U.S. Non-Farm Payrolls
EURUSD M5 : 48 pips by USD - NFP news event

U.S. Non-Farm Payrolls increased 288K in April following a revised 203K rise the month prior, while the jobless rate unexpectedly slipped to an annualized 6.3% from 6.7% as discouraged workers continued to leave the labor force. The better-than-expected NFP print pushed the EUR/USD back down towards the 1.3800 handle, but the market reaction was certainly short-lived as the pair ended the day at 1.3871.

--- Written by David Song, Currency Analyst

More...

- U.K. Jobless Claims to Decline for 19 Consecutive Months
- ILO Unemployment Rate to Narrow to 6.7%- Lowest Since January 2009

Trading the News: U.K. Jobless Claims Change

Another decline in U.K. Jobless Claims may prompt a near-term advance in the GBP/USD as it puts increased pressure on the Bank of England (BoE) to normalize monetary policy sooner rather than later.

What’s Expected:

Why Is This Event Important:

Indeed, the BoE Minutes due out on June 18 may highlight a growing dissent within the Monetary Policy Committee (MPC) as the central bank continues to see a stronger recovery in 2014, and the bullish sentiment surrounding the British Pound may gather pace in the second-half of the year should we see a growing number of BoE officials adopt a more hawkish tone for monetary policy.

Expectations: Bullish Argument/Scenario

Release	Expected	Actual
Manufacturing Production (MoM) (APR)	0.4%	0.4%
Personal Consumption (QoQ) (1Q P)	0.6%	0.8%
Retail Sales ex Auto (MoM) (APR)	0.5%	1.8%

The ongoing expansion in private sector consumption along with the rise in business outputs may generate a larger-than-expected decline in unemployment, and an upbeat labor report may pave the way for a higher-high in the GBP/USD as it raises the fundamental outlook for the U.K. economy.

Risk: Bearish Argument/Scenario

Release	Expected	Actual
Mortgage Approvals (APR)	64.5K	62.9K
BBA Loans for House Purchases (APR)	45100	42173
Consumer Price Index (YoY) (APR)	1.7%	1.8%

However, sticky inflation paired with the slowdown in private lending may drag on hiring, and a dismal jobless claims report may spur a larger correction in the GBP/USD as it drags on interest rate expectations.

How To Trade This Event Risk

Bullish GBP Trade: U.K. Jobless Claims Contract 25.0K or Greater

• Need green, five-minute candle following a hawkish statement to favor a long British Pound trade
• If reaction favors buying British Pound, long GBP/USD 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: Labor Data Disappoints, Dragging on Rate Expectations

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

Potential Price Targets For The Release
GBP/USD Daily

• Outlook Remains Bullish as Pair Holds Above Monthly Opening Low (1.6697)
• Interim Resistance: 1.7000 Pivot to 1.7030 (100.0% expansion)
• Interim Support: Interim Support: 1.6660 (61.8% retracement) to 1.6680 (38.2% 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)
APR 2014	05/14/2014 8:30 GMT	-30.0K	-25.1K	-72	-85

April 2014 U.K. Jobless Claims Change
GBPUSD M5 : 41 pips price movement by GBP - Unemployment Rate news event:

U.K. Jobless Claims fell another 25.1K in April following the 30.6K contraction the month prior, while the ILO rate narrowed to an annualized 6.8% from 6.9% to mark the lowest reading since February 2009. Nevertheless, the GBP/USD traded lower as the print missed market expectations, and the British Pound weakened further throughout the day as the Bank of England Inflation report dampened bets of seeing the central bank normalize monetary policy ahead of schedule.

--- Written by David Song, Currency Analyst

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- U. of Michigan Confidence Survey to Rebound in June
- Expected to Hold Above 80.0 for Seventh Consecutive Month

Trading the News: U. of Michigan Confidence

A rebound in the U. of Michigan Confidence survey may generate a further decline in the EUR/USD as it raises the fundamental outlook for the U.S. economy.

What’s Expected:

Why Is This Event Important:

Indeed, a further improvement in household sentiment may spur a greater dissent within the Federal Open Market Committee (FOMC), and the Fed may show a greater willingness to normalize monetary policy sooner rather than later as the central bank hawks see a faster recovery in the second-half of 2014.

Expectations: Bullish Argument/Scenario

Release	Expected	Actual
Consumer Credit (MAR)	$15.500B	$17.529B
Change in Non-Farm Payrolls (MAY)	215K	217K
Average Hourly Earnings (YoY) (MAY)	2.0%	2.1%

The ongoing pickup in employment paired with the uptick in wage growth may generate a marked rebound in consumer confidence, and a positive print may spur a bullish reaction in the USD as it raises the outlook for growth and inflation.

Risk: Bearish Argument/Scenario

Release	Expected	Actual
Advance Retail Sales (MoM) (MAY)	0.6%	0.3%
Personal Consumption Expenditure Core (YoY) (APR)	1.4%	1.4%
Consumer Price Index (YoY) (APR)	2.0%	2.0%

However, we may see another unexpected downtick in the confidence survey as household face sticky prices, and a dismal U. of Michigan print may dampen the appeal of the greenback as it drags on interest rate expectations.

How To Trade This Event Risk

Bullish USD Trade: U. of Michigan Survey Climbs to 83.0 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 Continues to Deteriorate

• 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
EUR/USD Daily

• Bullish Outside Day (Harami) in Focus as EUR/USD Preserves Monthly Low (1.3501)
• Interim Resistance: 1.3650 (78.6% expansion) to 1.3670 (61.8% retracement)
• Interim Support: 1.3490 (50.0% retracement to 1.3500 Pivot

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)
MAY P 2014	05/16/2014 13:55 GMT	84.5	81.8	-8	-18

May P 2014 U. of Michigan Confidence Survey
USDJPY M5 : 15 pips price movement by USD - UoM Consumer Sentiment news event

The U. of Michigan Confidence survey unexpectedly weakened in May, with the index slipping to 81.8 from 84.1 the month prior. Despite the weaker-than-expected print, the EUR/USD struggled to hold above the 1.3700 handle, with the pair closing the day at 1.3692.

--- Written by David Song, Currency Analyst

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