Trading News Events

Trading the News: Reserve Bank of New Zealand Interest Rate Decision
What’s Expected:
Time of release: 06/12/2013 21:00 GMT, 17:00 EDT
Primary Pair Impact: NZDUSD
Expected: 2.50%
Previous: 2.50%
DailyFX Forecast: 2.50%

Why Is This Event Important:

Although the Reserve Bank of New Zealand (RBNZ) is widely expected to keep the benchmark interest rate at 2.50% in June, the statement accompanying the rate decision may heighten the appeal of the New Zealand dollar should Governor Graeme Wheeler adopt a more hawkish tone for monetary policy. Indeed, the central bank head may continue to highlight the risk of an asset bubble as the rebuilding effort from the Christchurch earthquake is expected to boost economic activity, and the RBNZ may see scope to start normalizing monetary policy in the second-half of the year as recovery gathers pace.

Recent Economic Developments
The Upside

Release	Expected	Actual
QV House Prices (YoY) (MAY)	--	7.1%
Value of All Buildings s.a. (1Q)	--	5.8%
Employment Change (QoQ) (1Q)	0.8%	1.7%

The Downside

Release	Expected	Actual
Trade Balance (APR)	515M	157M
Retail sales ex Inflation (QoQ) (1Q)	0.8%	0.5%
Private Wages ex Overtime (QoQ) (1Q)	0.5%	0.4%

Rising home prices paired with the marked pickup in the labor market may fuel increased concerns for an asset bubble, and Governor Wheeler may see scope to lift the benchmark interest rate off the record-low in order to balance the risks surrounding the region. However, the slowdown in private sector consumption along with the easing trade conditions may prompt the RBNZ to strike a more neutral tone for monetary policy, and the central bank may retain its current policy throughout 2013 in order to address the persistent slack in the real economy.

Potential Price Targets For The Rate Decision



As the NZDUSD comes off of the 61.8% Fibonacci retracement from the 2011 low to high around 0.7770, a more hawkish statement from the RBNZ may pave the way for a move back towards the 38.2% retracement (0.8180), and we may see the pair retain the upward trend dating back to 2010 should the central bank show a greater willingness to start normalizing monetary policy in the second-half of the year. However, a further pledge to retain the wait-and-see approach may dampen the appeal of the higher-yielding currency, and the fresh batch of central bank rhetoric may produce another test of the 61.8% Fib should Governor Wheeler sound more dovish this time around.

How To Trade This Event Risk

Trading the given event risk may not be as clear cut as some of our previous as the RBNZ is widely expected to keep the benchmark interest rate on hold, but the fresh batch of central bank rhetoric may instill a bullish outlook for the New Zealand dollar should the central bank sound more hawkish this time around. Therefore, if Governor Wheeler shows a greater willingness to start normalizing monetary policy in the second-half of the year, we will need to see a green, five-minute candle following the event to establish a long entry on two-lots of NZDUSD. Once these conditions are met, we will set the initial stop at the nearby swing low or a reasonable distance from the entry, and this risk will generate our first objective. The second target will be based on discretion, and we will move the stop on the second lot to breakeven once the first trade hits its mark in an effort to lock-in our gains.

In contrast, the ongoing slack in the real economy may encourage the RBNZ to strike a more balanced tone for monetary policy, and speculation for a neutral policy stance may drag on the exchange rate as market participants scale back bets for higher borrowing costs. As a result, if the central bank shows a greater willingness to keep the cash rate at 2.50% throughout 2013, we will implement the same setup for a short kiwi-dollar trade as the long position laid out above, just in reverse.

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)
APR 2013	04/23/2013 21:00 GMT	2.50%	2.50%	+43	+82

April 2013 Reserve Bank of New Zealand Interest Rate Decision



Although the Reserve Bank of New Zealand kept the benchmark interest rate at 2.50%, Governor Graeme Wheeler struck a rather upbeat tone as the recovery picks up, and went onto say that ‘the bank does not want to see financial or price stability compromised by housing demand getting too far ahead of supply’ as the record-low interest rate raises the risk for an asset bubble. Indeed, the New Zealand dollar surged higher following the remarks, with the NZDUSD climbing towards the 0.8450 figure, and the higher-yielding currency gained ground throughout the day as the pair closed at 0.8474.
--- Written by David Song, Currency Analyst



More...

Trading the News: U. of Michigan Confidence

What’s Expected:
Time of release: 05/17/2013 13:55 GMT, 9:55 EDT
Primary Pair Impact: EURUSD
Expected: 84.5
Previous: 84.5
DailyFX Forecast: 80.0 to 86.0

Why Is This Event Important:

The U. of Michigan Confidence survey is expected to hold at a five-year high in May, but another uptick in household sentiment may further dampen the Fed’s scope to expand the balance sheet further as growth prospects improve. Should the data raise the outlook for private sector consumption – one of the leading drives of growth – the print may fuel a near-term correction in the U.S. dollar, and we may see a growing number of central bank officials look to taper the asset-purchase program as the world’s largest economy gets on a more sustainable path.

Recent Economic Developments
The Upside

Release	Expected	Actual
Advance Retail Sales (MAY)	0.4%	0.6%
Change in Non-Farm Payrolls (MAY)	163K	175K
Durable Goods Orders (APR)	1.5%	3.3%

The Downside

Release	Expected	Actual
Consumer Credit (APR)	$12.900B	$11.058B
Average Hourly Earnings (MAY)	2.1%	2.0%
Personal Income (APR)	0.1%	0.0%

The resilience in household spending along with the ongoing improvement in the labor market may ultimately lead to another uptick in the U. of Michigan survey, and a positive development may increase the appeal of the USD as it puts increase pressure on the FOMC to move away from its easing cycle. However, subdued wage growth paired with the slowdown in private lending may drag on household confidence, and a sharp decline in the headline figure may drag on the exchange rate as it gives the Fed increased room to retain its highly accommodative policy stance.

Potential Price Targets For The Release



As the relative strength index comes up against overbought territory, the EURUSD may continue to trade below the 1.3400 handle, and a positive U. of Michigan survey may serve as the fundamental catalyst to prompt a selloff in the exchange rate as the fundamental outlook for the U.S. improves. However, as the 78.6% Fibonacci retracement from the February decline lines up with the 50.0% retracement from the 2009 high to the 2010 low around 1.3500, we may see a test of the key figure should the data print fall short of market forecast.

How To Trade This Event Risk

Trading the given event risk may not be as clear cut as our previous trades as the print is expected to hold steady in May, but an upbeat print may set the stage for a long U.S. dollar trade as it curbs bets for additional Fed support. Therefore, if the U. of Michigan survey tops market expectations, we will need to see a red, five-minute candle following the release to generate a sell entry on two-lots of EURUSD. Once these conditions are fulfilled, we will place the initial stop at the nearby swing high or a reasonable distance from the entry, and this risk will establish our first objective. The second target will be based on discretion, and we will move the stop on the second lot to breakeven once the first trade hits its mark in order to lock-in our gains.

On the other hand, slower wage growth paired with the ongoing slack in the real economy may drag on household confidence, and an unexpected downtick in the survey may drag on the greenback as it weakens the outlook for growth. As a result, if the survey disappoints, we will implement the same strategy for a long euro-dollar trade as the short position mentioned out above, but in the opposite direction.

Impact that the U. of Michigan Confidence survey has had on USD during the last month

Period	Data Released	Estimate	Actual	Pips Change (1 Hour post event )	Pips Change (End of Day post event)
MAY P 2013	05/17/2013 13:55 GMT	77.9	83.7	+17	+29

May 2013 U. of Michigan Confidence


U.S. consumer sentiment jumped higher in June, with the U. of Michigan survey advancing to 83.7 to mark the highest reading since July 2007, while inflation expectations for the next 12-months held steady at 3.1% for the second month. Despite the better-than-expected print, the dollar failed to benefit from the positive print as the EURUSD climbed back above the 1.2800 handle, and the reserve currency struggled to hold its ground throughout the North American trade as the pair closed at 1.2833.
--- Written by David Song, Currency Analyst

More...

Trading the News: U.K. Consumer Price Index
What’s Expected:
Time of release: 06/18/20138:30 GMT, 4:30 EDT
Primary Pair Impact: GBPUSD
Expected: 2.6%
Previous: 2.4%
DailyFX Forecast: 2.5% to 2.7%

Why Is This Event Important:

U.K. Consumer Prices are projected to increase an annualized 2.6% in May and a faster rate of inflation may spark a near-term rally in the British Pound as it dampens speculation for more quantitative easing. As the U.K. skirts a triple-dip recession, we should see the Bank of England (BoE) keep the Asset-Purchase Facility (APF) capped a t GBP 375B, and we may see a growing number of central bank officials adopt a more hawkish tone for monetary policy as the region is expected to face above-target inflation over the policy horizon.
Recent Economic Developments

The Upside

Release	Expected	Actual
Jobless Claims Change (APR)	-5.0K	-8.6K
Average Weekly Earnings ex Bonus (APR)	0.8%	0.9%
Net Consumer Credit (APR)	0.4B	0.5B

The Downside

Release	Expected	Actual
CBI Reported Sales (MAY)	3	-11
Retail Sales ex Auto Fuel (MoM) (APR)	0.1%	-1.4%
Producer Price Index- Input n.s.a. (YoY) (APR)	0.3%	-0.1%

Firms in the U.K. may raise consumer prices amid the expansion in private sector lending along with the ongoing improvement in the labor market, and a marked uptick in inflation should heighten the appeal of the sterling as market participants scale back bets for additional monetary support. However, easing input costs paired with the slowdown in household spending may prompt businesses to conduct further discounts in order to draw demands, and the BoE may keep the door open to expand the balance sheet further in an effort to encourage a stronger recovery.

Potential Price Targets For The Release



Although the relative strength index on the GBPUSD is coming up against overbought territory, the rebound off of 78.6% Fibonacci expansion (1.5610-20) from the March advance may trigger a run at the 100% expansion around 1.5780, and the sterling may continue to recoup the losses from earlier this year should the data further dampen the BoE’s scope to implement more quantitative easing. However, a dismal CPI print may spark a near-term correction in the exchange rate, and we may see a move back towards 61.8% expansion around 1.5480-90 to test for interim support.

How To Trade This Event Risk

Expectations for a faster rate of inflation instills a bullish outlook for the sterling, and a strong print may pave the way for a long British Pound trade as it dampens the scope for additional monetary support. Therefore, if price growth expands an annualized 2.6% or greater in May, we will need a green, five-minute candle following the report to generate a long entry on two-lots of GBPUSD. Once these conditions are fulfilled, we will set the initial stop at the nearby swing low or a reasonable distance from the entry, and this risk will establish our first objective. The second target will be based on discretion, and we will move the stop on the second lot to cost once the first trade hits its mark in order to lock-in our profits.

In contrast, the persistent slack in the real economy along with the slowdown in retail sales may drag on price growth, and a weak CPI print may spark a sharp selloff ahead of the BoE Minutes as it renews speculation for more easing. As a result, if the headline reading for inflation disappoints, we will implement the same strategy for a short pound-dollar trade as the long position laid out above, just in the opposite direction.

Impact that the U.K. Consumer Price report has had on GBP during the last month

Period	Data Released	Estimate	Actual	Pips Change (1 Hour post event )	Pips Change (End of Day post event)
APR 2013	05/21/2013 8:30 GMT	2.6%	2.4%	-30	-63

April 2013 U.K. Consumer Price Index



The headline reading for U.K. inflation slipped to an annualized 2.4% from 2.8% in March to mark the slowest pace of growth since September, while the core rate narrowed to 2.0% during the same period amid forecasts for a 2.3% print. Indeed, the slowdown in price growth dragged on the British Pound, with the GBPUSD slipping below the 1.5300 handle, and the sterling struggled to hold its ground throughout the North American trade as the pair ended the day at 1.5149.
--- Written by David Song, Currency Analyst


More...

Trading the News: Federal Open Market Committee Meeting

What’s Expected:
Time of release: 06/19/2013 18:00 GMT, 14:00 EDT
Primary Pair Impact: EURUSD
Expected: 0.25%
Previous: 0.25%
DailyFX Forecast: 0.25%

Why Is This Event Important:

Although the Federal Open Market Committee (FOMC) is widely anticipated to preserve its highly accommodative policy stance in June, the fresh batch of central bank rhetoric along with the updated forecast may increase the appeal of the USD should we see a growing argument to taper the asset-purchase program. Indeed, it seems as though the FOMC is slowly moving away from its easing cycle as the U.S. economy gets on a more sustainable path, and the central bank may start to lay out a more detailed exit strategy as the committee sees a stronger recovery in the second-half of the year.

Recent Economic Developments
The Upside

Release	Expected	Actual
Advance Retail Sales (MAY)	0.4%	0.6%
Change in Non-Farm Payrolls (MAY)	163K	175K
Durable Goods Orders (APR)	1.5%	3.3%

The Downside

Release	Expected	Actual
Consumer Credit (APR)	$12.900B	$11.058B
Average Hourly Earnings (YoY) (MAY)	2.1%	2.0%
Personal Income (APR)	0.1%	0.0%

The resilience in private sector consumption along with the ongoing improvements in the labor market may prompt the FOMC to drop its dovish tone for monetary policy, and we may see a growing number of central bank officials look to halt the easing cycle as the economic recovery gradually gathers pace. However, subdued wage growth paired with the slowdown in private sector credit may encourage the FOMC to further expand the balance sheet, and the central bank may keep the door open to expand its quantitative easing program beyond the $85 monthly limit in order to stem the downside risks surrounding the region.

Potential Price Targets For The Rate Decision



The EURUSD looks poised for a correction as the relative strength index continues to flirt with overbought territory, and the FOMC interest rate decision may serve as the fundamental catalyst to spark a short-term reversal in the exchange rate should the central bank show a greater willingness to scale back its asset-purchase program. However, a more dovish Fed is likely to dampen the appeal of the USD, and we may see the rate decision trigger a run at the 78.6% Fibonacci retracement (1.3500) from the February decline should the committee keep the door open to expand its asset-purchase program beyond the $85B monthly limit.

How To Trade This Event Risk

Trading the given event risk may not be as clear cut as some of our previous trades as the FOMC preserves its current policy, but a further shift in the policy outlook may spark a bullish reaction in the U.S. dollar as market participants scale back bets for more quantitative easing. Therefore, if the FOMC strikes a more hawkish tone for monetary policy and looks to taper the asset-purchase program, we will need a red, five-minute candle following the policy statement to establish a sell entry on two-lots of EURUSD. Once these conditions are fulfilled, we will place the initial stop at the nearby swing high or a reasonable distance from the entry, and this risk will generate our first target. The second objective will be based on discretion, and we will move the stop on the second lot to breakeven once the first trade hits its mark in order to preserve our profits.

In contrast, the Fed may retain a cautious tone amid the ongoing slack in the real economy, and the central bank may keep the door open to expand the balance sheet further in an effort to encourage a stronger recovery. As a result, if the FOMC shows a greater willingness to further embark on its easing cycle, we will carry out the same setup for a long euro-dollar trade as the short position laid out above, just in the opposite direction.

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

Period	Data Released	Estimate	Actual	Pips Change (1 Hour post event )	Pips Change (End of Day post event)
MAY 2013	05/01/2013 18:00 GMT	0.25%	0.25%	+14	-13

May 2013 Federal Open Market Committee Interest Rate Decision



Although The FOMC stuck to its current policy in May, the central bank stated that ‘the committee is prepared to increase or reduce the pace’ of its asset-purchase program as it responds to incoming data, and went onto say that it will retain a highly accommodative policy stance ‘until the outlook for the labor market has improved substantially.’ Indeed, the dollar struggled to hold its ground following the mixed tone, with the EURUSD climbing above the 1.3200 handle, but the greenback regained its footing during the North American trade to end the day at 1.3178.
--- Written by David Song, Currency Analyst


More...

What is FOMC Meeting

The Federal Open Market Committee (FOMC) is the policy-making arm of the Federal Reserve. It determines short-term interest rates in the U.S. when it decides the overnight rate that banks pay each other for borrowing reserves when a bank has a shortfall in required reserves. This rate is the fed funds rate. The FOMC also determines whether the Fed should add or subtract liquidity in credit markets separately from that related to changes in the fed funds rate. The Fed announces its policy decision (typically whether to change the fed funds target rate) at the end of each FOMC meeting. This is the FOMC announcement. The announcement also includes brief comments on the FOMC's views on the economy and how many FOMC members voted for and how many voted against the policy decision.

Trading the News: Canada Consumer Price Index

What’s Expected:
Time of release: 06/21/2012 12:30 GMT, 8:30 EDT
Primary Pair Impact: USDCAD
Expected: 0.9%
Previous: 0.4%
DailyFX Forecast: 0.5% to 0.8%

Why Is This Event Important:

The headline reading for Canadian inflation is expected to increase an annualized 0.9% in May, and the faster rate of price growth may prop up the loonie should the data renew speculation for higher borrowing costs. However, we may see Bank of Canada (BoC) Governor Stephen Poloz retain a wait-and-see approach in the second-half of the year amid the slowing recovery, and the central bank adopt a more neutral tone in the coming months in an effort to further strengthen the real economy.

Recent Economic Developments
The Upside

Release	Expected	Actual
Existing Home Sales (MoM) (MAY)	--	3.6%
New Housing Price Index (MoM) (APR)	0.1%	0.2%
Net Change in Employment (MAY)	15.0K	95.0K

The Downside

Release	Expected	Actual
Wholesale Sales (MoM) (APR)	0.3%	0.2%
Retail Sales (MoM) (MAR)	0.1%	0.0%
Raw Materials Price Index (MoM) (APR)	-0.9%	-2.2%

Beyond rising home prices, the marked improvement in the labor market may prompt Canadian firms to ramp up consumer prices, and a stronger-than-expected inflation print may spark a bullish reaction in the loonie as market participants increase bets for a rate hike. However, businesses may continue to embark on heavy discounting amid the slowdown in private sector consumption, and a dismal development may drag on the Canadian dollar as it dampens the fundamental outlook for the region.

Potential Price Targets For The Release



As Canadian price growth is expected to pick up in May, we may see the USDCAD continue to come off of trendline resistance, and the wedge/triangle formation may continue to take shape in the second-half of the year as the BoC retains a neutral stance for monetary policy. However, should the inflation report disappoint, we may see the upward trending channel from earlier this year foster a bullish breakout in the exchange rate, and the pair may continue to track higher over the coming months amid the deviation in the policy outlook.

How To Trade This Event Risk

Forecasts for a faster rate of inflation instills a bullish outlook for the loonie, and the market reaction may pave the way for a long Canadian dollar trade as it reignites bets for a rate hike. Therefore, if the consumer price report tops market expectations, we will need to see a red, five-minute candle following the release to establish a sell entry on two-lots of USDCAD. Once these conditions are met, we will place the initial stop at the nearby swing high or a reasonable distance from the entry, and this risk will generate our first target. The second objective will be based on discretion, and we will move the stop on the second lot to cost once the first trade hits its mark in order to preserve our gains.

However, the slowing recovery continue to drag on price growth, and a dismal print may trigger a bearish reaction in the Canadian dollar as market participants scale back bets for higher borrowing costs. As a result, if the CPI disappoints, we will implement the same setup for a long dollar-loonie trade as the short position mentioned above, just in reverse.

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

Period	Data Released	Estimate	Actual	Pips Change (1 Hour post event )	Pips Change (End of Day post event)
APR 2013	05/17/2013 12:30 GMT	0.6%	0.4%	+8	+8

April 2013 Canada Consumer Price Index



Consumer prices in Canada increased an annualized 0.4% during the month of April to mark the slowest pace of growth since October 2009, while the core rate of inflation narrowed to 1.1% from 1.4% amid forecasts for a 1.2%. Although we saw a fairly muted reaction in the USDCAD following the release, the Canadian dollar struggled to hold its ground during the North American trade, with the pair ending the day at 1.0276.
--- Written by David Song, Currency Analyst




More...

Trading the News: U.S. Durable Goods Orders
What’s Expected:
Time of release: 06/25/2013 12:30 GMT, 8:30 EDT
Primary Pair Impact: EURUSD
Expected: 3.0%
Previous: 3.3%
DailyFX Forecast: 3.0% to 3.5%

Why Is This Event Important:

Demands for U.S. Durable Goods are expected to increase another 3.0% in May and the resilience in private-sector consumption may prop up the dollar as it raises the Fed’s scope to taper its asset-purchase program. As the FOMC appears to be slowly moving away from its easing cycle, the shift in the policy outlook may heighten the bullish sentiment surrounding the greenback, and the reserve currency may outperform in the second-half of the year as the central bank looks to change course.

Recent Economic Developments

The Upside

Release	Expected	Actual
Advance Retail Sales (APR)	0.4%	0.6%
Change in Non-Farm Payrolls (APR)	163K	175K
Consumer Confidence (MAY)	71.2	76.2

The Downside

Release	Expected	Actual
Consumer Credit (APR)	$12.900B	$11.058B
Average Hourly Earnings (YoY) (MAY)	2.1%	2.0%
Personal Income (APR)	0.1%	0.0%

The rise in consumer confidence along with the ongoing improvement in the labor market may encourage greater demands for large-ticket items, and the resilience in private sector consumption may prompt the FOMC to dial back its quantitative easing program as the outlook for growth improves. However, subdued waged growth paired with the slowdown in private lending may drag on spending, and a dismal development may dampen the appeal of the USD as the central bank continues to highlight the persistent slack in the real economy.

Potential Price Targets For The Release



The head-and-shoulders formation in the EURUSD should continue to take shape as it carves out a lower top in May, and the pair looks poised for a move back towards the 23.6% Fibonacci retracement from the 2009 high to the 2010 low around 1.2640-50 as the fundamental outlook for the U.S. economy improves. However, a dismal durable goods report may spark another test of the 38.2% retracement (1.3120), and we may see the bearish pattern fail to pan out should the developments coming out of the U.S. renew bets for additional monetary support.

How To Trade This Event Risk

As private sector consumption remains one of the leading drives of growth, a positive development may pave the way for a long U.S. dollar trade as it dampens the Fed’s scope to expand its asset-purchase program. Therefore, if orders increase 3.0% or greater in May, we will need to see a red, five-minute candle following the release to generate a sell entry on two-lots of EURUSD. Once these conditions are fulfilled, we will set the initial stop at the nearby swing high or a reasonable distance from the entry, and this risk will establish our first target. The second objective will be based on discretion, and we will move the stop on the second lot to breakeven once the first trade hits its mark in an effort to preserve our profits.

On the other hand, orders for U.S. durable goods may taper off amid the ongoing slack in the real economy, and a dismal print may drag on the greenback as the data fuels bets for more QE. As a result, if the report falls short of market expectations, we will implement the same setup for a long euro-dollar trade as the short position mentioned above, just in the opposite direction.

Impact that the U.S. Durable Goods Orders report has had on USD during the last month

Period	Data Released	Estimate	Actual	Pips Change (1 Hour post event )	Pips Change (End of Day post event)
APR 2013	05/24/2013 12:30 GMT	1.5%	3.3%		-5

April 2013 U.S. Durable Goods Orders



Orders for U.S. durable goods increased 3.3% in April following a revised 5.9% contraction the month prior, while demands for non-defense capital goods excluding aircrafts, a proxy for business investments, climbed 1.2% amid forecasts for a 0.5% print. Indeed, the bullish dollar reaction was short-lived as the EURUSD moved back above the 1.2950 figure, but we saw the greenback firm up during the North American trade as the pair ended the day at 1.2933.
--- Written by David Song, Currency Analyst


More...

Trading the News: German Unemployment Change
What’s Expected:
Time of release:06/27/2013 7:55 GMT, 3:55 EDT
Primary Pair Impact: EURUSD
Expected: 8K
Previous: 21K
DailyFX Forecast: 2K to -2K

Why Is This Event Important:

Unemployment in Europe’s largest economy is expected to increase another 8K in June, and the ongoing weakness in the labor market may prompt the European Central Bank (ECB) to further embark on its easing cycle as it dampens the outlook for growth and inflation. Indeed, it seems as though the ECB will implement more non-standard measures over the coming months as the euro-area remains mired in recession, and President Mario Draghi may endorse a negative interest rate policy for the monetary union in an effort to encourage lending to small and medium-sized enterprises (SME).

Recent Economic Developments
The Upside

Release	Expected	Actual
IFO – Business Climate (JUN)	105.9	105.9
Industrial Production s.a. (MoM) (APR)	0.0%	1.8%
Trade Balance (APR)	17.0B	18.1B

The Downside

Release	Expected	Actual
Labor Costs s.a. (QoQ) (1Q)	--	1.1%
Factory Orders s.a. (MoM) (APR)	-1.0%	-2.3%
Retail Sales (MoM) (APR)	0.2%	-0.4%

The uptick in business confidence along with the pickup in global trade may limit the rise in unemployment, and a better-than-expected print may dampen speculation for more ECB support as the central bank sees the euro-area returning to growth later this year. However, rising labor costs paired with slowing demands may push firms to scale back on hiring, and a dismal development may drag on the Euro as it fuels speculation for further rate cuts from the central bank.

Potential Price Targets For The Release



As the near-term correction in the EURUSD continues to take shape, another rise in German unemployment may trigger a break below the 23.6% Fibonacci retracement around 1.2970, and we may see the euro-dollar threaten the upward trend from earlier this year should the data fuel speculation for additional monetary support. However, as the EU Summit takes center stage, we may see a limited reaction to the jobs report, and the headlines coming out of the meeting may play a greater role in driving price action for the EURUSD as the group of European policy makers look to utilize the European Stability Mechanism (ESM) to recapitalize commercial banks.

How To Trade This Event Risk

Expectations for fifth consecutive rise in unemployment certainly casts a bearish outlook for the single currency, but a positive development may pave the way for a long Euro trade as it dampens bets for more monetary support. As a result, if the print tops market expectations, we will need to see a green, five-minute candle following the release to generate a long entry on two-lots of EURUSD. Once these conditions are met, we will set the initial stop at the nearby swing low or a reasonable distance from the entry, and this risk will establish our first target. The second objective will be based on discretion, and we will move the stop on the second lot to cost once the first trade hits its mark in order to preserve our profits.

In contrast, the ongoing slack in the real economy may continue to drag on job growth as businesses face slowing demands, and the report may highlight a weakening outlook for the region as the euro-area struggles to return to growth. As a result, if unemployment climbs 8K or more in June, we will implement the same strategy for a short euro-dollar trade as the long position mentioned above, just in reverse.

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)
MAY 2013	05/29/2013 7:55 GMT	5K	21K	+33	+83

May 2013German Unemployment Change



Unemployment in Germany increased another 21K in May following a revised 6K rise the month prior, while the jobless rate held steady at 6.9% for the eighth consecutive month. Despite the dismal print, the Euro pared the decline from the previous day, with the EURUSD pushing above the 1.2875 handle, and the single currency gained ground throughout the day as the pair closed at 1.2938.
--- Written by David Song, Currency Analyst

More...

Trading the News: German Retail Sales
What’s Expected:
Time of release: 06/28/2013 6:00 GMT, 2:00 EDT
Primary Pair Impact: EURUSD
Expected: 0.4%
Previous: -0.4%
DailyFX Forecast: -0.4% to 0.4%

Why Is This Event Important:

German retail sales are projected to increase 0.4% in May and the rebound in private sector consumption may prop up the Euro as it raises the outlook for growth. As the European Central Bank (ECB) anticipates the euro-area to return to growth later this year, a positive development may limit the Governing Council’s scope to implement more non-standard, and the group may retain its current policy at the July 4 meeting as President Mario Draghi strikes a more neutral tone for monetary policy.

Recent Economic Developments
The Upside

Release	Expected	Actual
Unemployment Change (JUN)	8K	-12K
GfK Consumer Confidence Survey (JUL)	6.5	6.8
IFO – Business Climate (JUN)	105.9	105.9

The Downside

Release	Expected	Actual
Purchasing Manager Index – Manufacturing (JUN A)	49.9	48.7
Factory Orders s.a. (MoM) (APR)	-1.0%	-2.3%
Consumer Price Index (YoY) (MAY P)	1.3%	1.5%

The downtick in unemployment along with the rise in consumer confidence certainly bodes well for retail sales, and a strong rebound may heighten the appeal of the single currency as it saps bets for additional ECB support. However, stick price growth paired with the persistent slack in the real economy may continue to drag on household spending, and a dismal development may drag on the exchange rate as it dampens the prospects for a strong recovery in the euro-area.

Potential Price Targets For The Release



The short-term rebound in the EURUSD may gather pace should the German retail sales report instill an improved outlook for the euro-area, but the pair may struggle to hold above the 23.6% Fibonacci retracement around the 1.2970 region should the data fall short of market expectations. However, as we head into the second day of the EU Summit, we may see a muted reaction to the sales figure, and headlines coming out of the meeting may have a greater impact on the exchange rate as the EU looks to utilize the European Stability Mechanism (ESM) to shore up its banking sector.

How To Trade This Event Risk

Forecasts for a rebound in German retail sales instills a bullish outlook for the single currency, and the market reaction may pave the way for a long Euro trade as it raises the outlook for growth. As a result, if spending increases 0.4% or more in May, we will need a green, five-minute candle following the release to generate a long entry on two-lots of EURUSD. Once these conditions are fulfilled, we will set the initial stop at the nearby swing low or a reasonable distance from the entry, and this risk will establish our first objective. The second target will be based on discretion, and we will move the stop on the second lot to cost once the first trade hits its mark in an effort to protect our gains.

On the other hand, sticky price growth paired with the persistent slack in the real economy may continue to hurt consumption, and a dismal print may dampen the appeal of the single currency as it fuels speculation for additional monetary support. As a result, if the sales report falls short of market expectations, we will carry out the same setup for a short euro-dollar trade as the long position laid out above, just in the opposite direction.

Impact that German Retail Sales 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)
APR 2013	05/31/2013 6:00 GMT	0.2%	-0.4%	-4	-39

April 2013 German Retail Sales



Household spending in Germany slipped another 0.4% during April, led by a 5.0% decline in demands for inflation technology, while sales of pharmaceuticals and cosmetics fell 4.4% during the same period. Despite the dismal print, the EURUSD held steady following the release, but the single currency struggled to hold its ground throughout the day as it closed at 1.2994.
--- Written by David Song, Currency Analyst


More...

Trading the News: Reserve Bank of Australia Interest Rate Decision
What’s Expected:
Time of release: 07/02/2013 4:30 GMT, 0:30 EDT
Primary Pair Impact: AUDUSD
Expected: 2.75%
Previous: 2.75%
DailyFX Forecast: 2.75%

Why Is This Event Important:

The Reserve Bank of Australia (RBA) is widely expected to keep the benchmark interest rate at 2.75% in July, but the fresh batch of central bank rhetoric may drag on the Australian dollar should Governor Glenn Stevens show a greater willingness to further embark on the easing cycle. According to Credit Suisse overnight index swaps, market participants are pricing at least one more 25bp rate cut over the next 12-months, and the RBA may push the cash rate to a fresh record-low in the second-half of the year in an effort to further insulate the $1T economy.

Recent Economic Developments
The Upside

Release	Expected	Actual
Private Sector Credit (YoY) (MAY)	2.9%	3.0%
Employment Change (MAY)	-10.0K	1.1K
Westpac Consumer Confidence (JUN)	--	4.7%

The Downside

Release	Expected	Actual
Trade Balance (APR)	180M	28M
Gross Domestic Product (QoQ) (1Q)	0.7%	0.6%
Retail Sales s.a. (MoM) (APR)	0.3%	0.2%

The rebound in employment along with the expansion in private sector credit may encourage the RBA to scale back its dovish tone for monetary policy, and a more neutral policy statement may heighten the appeal of the higher-yielding currency as market participants scale back bets for more easing. However, the persistent weakness in global trade paired with the ongoing slack in the real economy may prompt Governor Stevens to deliver another rate cut in 2013, and the Australian dollar may face additional headwinds over the remainder of the year as the fundamental outlook for the region remains weak.

Potential Price Targets For The Rate Decision



As the relative strength index on the AUDUSD bounces back from oversold territory, the rebound from 0.9106 may gather pace in the coming days, and a more neutral statement from the RBA may spur a more meaningful correction in the exchange rate as market participants scale back bets for lower borrowing costs. However, the pair may produce a fresh yearly low should the RBA rate decision heighten speculation for another rate cut, and the bearish trend dating back to 2011 may continue to take shape as the fundamental outlook for the region deteriorates.

How To Trade This Event Risk

Trading the given event risk may not be as clear cut as some of our previous trades as we anticipate the RBA to preserve its current policy in July, but a less-dovish statement accompanying the rate decision could pave the way for a long Australian dollar trade as market participants scale back bets for a rate cut. Therefore, if Governor Stevens strikes an improved outlook for the $1T economy, we will need a green, five-minute candle subsequent to the announcement to generate a long entry on two-lots of AUDUSD. Once these conditions are met, we will set the initial stop at the nearby swing low or a reasonable distance from the entry, and this risk will establish our first target. The second objective will be based on discretion, and we will move the stop on the second lot to cost once the first trade hits its mark in an effort to preserve our gains.

In contrast, the ongoing slack in the real economy paired with the weakening outlook for growth and inflation may keep prompt further rate cuts, and Governor Stevens may show a greater willingness to push the benchmark interest rate to a fresh record-low in an effort to further insulate the economy. As a result, if the RBA surprises with a 25bp rate cut or strike a highly dovish tone for monetary policy, we will implement the same strategy for a short aussie-dollar as the long position mentioned above, just in the opposite direction.

Impact that the RBA Interest Rate Decision has had on AUD during the last meeting

Period	Data Released	Estimate	Actual	Pips Change (1 Hour post event )	Pips Change (End of Day post event)
JUN 2012	06/04/2013 4:30 GMT	2.75%	2.75%	+15	-68

June 2013 Reserve Bank of Australia Interest Rate Decision



Indeed, the Reserve Bank of Australia kept the door open to introduce additional rate cuts after holding the benchmark interest rate at 2.75%, and the central bank may further embark on its easing cycle in the second-half of the year in order to encourage a stronger recovery. Despite the uptick immediately following the rate decision, the AUDUSD struggled to hold its ground throughout the day, with the pair closing at 0.9646.
--- Written by David Song, Currency Analyst


More...