Trading News Events

Originally Posted by TheNews

- U.S. Consumer Price Index (CPI) to Slow for Fourth Time in 2014.
- Core Rate of Inflation to Hold at Annualized 1.7% for Third Month.

Trading the News: U.S. Consumer Price Index (CPI)
...

EURUSD M5: 52 pips ranging price movement by USD - CPI news event :

AUDUSD M5: 32 pips range price movement by USD - CPI news event :

- U.S. Durable Goods Orders to Contract for Third Straight Month.
- Non-Defense Capital Goods Orders ex Aircrafts to Expand for Fifth Time in 2014.

Trading the News: U.S. Durable Goods Orders

Another 0.6% contract in orders for U.S. Durable Goods may generate a more meaningful rebound in EUR/USD as it dampens the growth and inflation outlook for the world’s largest economy.

What’s Expected:

Why Is This Event Important:

The threat of a slower recovery may further delay the Fed’s normalization cycle as Chair Janet Yellen remains in no rush to remove the zero-interest rate policy (ZIRP), and the dollar may face a larger correction over the near-term should interest rate expectations falter.

Expectations: Bearish Argument/Scenario

Release	Expected	Actual
Gross Domestic Product (Annualized) (QoQ) (3Q P)	3.3%
Consumer Price Index (YoY) (OCT)	1.6%	1.7%
Average Hourly Earnings (YoY) (OCT)	2.1%	2.0%

Sticky inflation paired with subdued wage growth may sap demand for large-ticket items, and a dismal durable goods report may drag on the greenback as it dampens the prospects for a stronger recovery.

Risk: Bullish Argument/Scenario

Release	Expected	Actual
U. of Michigan Confidence (NOV P)	87.5	89.4
Advance Retail Sales (MoM) (OCT)	0.2%	0.3%
Wholesale Trade Sales (MoM) (SEP)	-0.1%	0.2%

Nevertheless, the ongoing improvement in consumer confidence may generate a better-than-expected print, and a rebound in demand for U.S. Durable Goods may heighten the bullish sentiment surrounding the dollar as the Fed is widely expected to raise the benchmark interest rate in 2015.

How To Trade This Event Risk

Bearish USD Trade: Orders Contract 0.6% or Greater

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

Bearish USD Trade: Demand for Large-Ticket Items Improve

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

Potential Price Targets For The Release
EUR/USD Daily Chart

USD/CAD Daily Chart

XAU/USD Daily Chart

• Will watch the November high (1.2599) as EUR/USD holds above the monthly low (1.2356).
• Interim Resistance: 1.2610 (61.8% expansion) to 1.2620 (50% retracement)
• Interim Support: 1.2280 (100% expansion) to 1.2300 pivot

Impact that the U.S. Durable Goods 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)
SEP 2014	10/28/2014 12:30 GMT	0.5%	-1.3%	+ 42	+ 27

September 2014 U.S. Durable Goods Orders
EURUSD M5: 56 pips price movement by USD - Durable Goods Orders news event:

Demand for U.S. Durable Goods slipped another 1.3% in September following the record 18.3% contraction the month prior. Orders for non-defense capital goods excluding aircraft, a proxy future business investments, also fell 1.7% during the same period. The persistent weakness in demand for large-ticket items may further dampen the outlook for global growthamid the weakening outlook for Europe and China. The greenback struggled to hold its ground following the worse-than-expected print, with EUR/USD climbing above the 1.2750 handle, but there was limited follow-through behind the market reaction as the pair closed at 1.2734.


--- Written by David Song, Currency Analyst and Shuyang Ren


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Originally Posted by TheNews

- U.S. Durable Goods Orders to Contract for Third Straight Month.
- Non-Defense Capital Goods Orders ex Aircrafts to Expand for Fifth Time in 2014.

Trading the News: U.S. Durable Goods Orders

...

XAUUSD M5: price movement by USD - Durable Goods Orders news event :

USDCAD M5: 11 pips price movement by USD - Durable Goods Orders news event :

EURUSD M5: 37 pips price movement by USD - Durable Goods Orders news event :

- Euro-Zone Consumer Price Index (CPI) to Slip Back to 0.3%- Lowest Since October 2009
- Core Rate of Inflation to Grow Annualized 0.7% for Second Consecutive Month

Trading the News: Euro-Zone Consumer Price Index (CPI)

A further slowdown in the Euro-Zone’s Consumer Price Index (CPI) may heighten the bearish sentiment surrounding the EUR/USD as it puts increased pressure on the European Central Bank (ECB) to implement more non-standard measures.

What’s Expected:

Why Is This Event Important:

There’s growing bets that the Governing Council may have little choice but to implement quantitative easing across the monetary union amid the growing threat for deflation, and the single currency remains at risk of facing additional headwinds in 2015 as the economic recovery remains subdued.

Expectations: Bearish Argument/Scenario

Release	Expected	Actual
Consumer Confidence (NOV A)	-10.7	-11.6
Markit Purchasing Manager Index Composite (NOV P)	52.3	51.4
Retail Sales (MoM) (SEP)	-0.8%	-1.3%

Waning confidence paired with the renewed weakness in private sector consumption may drag on price growth, and the growing risk for deflation may push the ECB to adopt more emergency measures in an effort to achieve its one and only mandate to deliver price stability.

Risk: Bullish Argument/Scenario

Release	Expected	Actual
Trade Balance s.a. (SEP)	16.0B	17.7B
Gross Domestic Product s.a. (QoQ) (3Q A)	0.1%	0.2%
Industrial Production w.d.a. (YoY) (SEP)	0.7%	0.8%

However, the CPI report may show sticky price growth in Europe as the region returns the growth, and a stronger-than-expected inflation print may trigger a more meaningful correction in EUR/USD as it mitigates the risk for deflation.

How To Trade This Event Risk

Bearish EUR Trade: Euro-Zone CPI Slips to 0.3% or Lower

• Need red, five-minute candle following the release to consider a short EUR/USD trade
• If market reaction favors selling Euro, short 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

Bullish EUR Trade: Headline Reading for Inflation Tops Market Forecast

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

Potential Price Targets For The Release
EUR/USD Daily Chart

• Will continue to look for lower highs & lows as the downward trending channel remains in play.
• Interim Resistance: 1.2610 (61.8% expansion) to 1.2620 (50% retracement)
• Interim Support: 1.2280 (100% expansion) to 1.2290 (38.2% expansion)

Impact that the Euro-Zone CPI report has had on EUR during the last release

Period	Data Released	Estimate	Actual	Pips Change (1 Hour post event )	Pips Change (End of Day post event)
OCT 2014	10/31/2014 10:00 GMT	0.4%	0.4%	+ 14	- 41

The Euro-Zone Consumer Price Index (CPI) rose an annualized 0.4% after expanding 0.3% in September, while the core rate of inflation unexpectedly slipped to 0.7% from 0.8% during the same period. Despite the rebound from a 5-year low, the weakening outlook for inflation may force the European Central Bank (ECB) to implement additional monetary support as the Governing Council struggles to achieve its one and only mandate for price stability. Despite the initial tick higher in EUR/USD, the single currency struggled to hold its ground during the North America trade as the pair ended the day at 1.2521.

--- Written by David Song, Currency Analyst and Shuyang Ren


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Originally Posted by TheNews

- Euro-Zone Consumer Price Index (CPI) to Slip Back to 0.3%- Lowest Since October 2009
- Core Rate of Inflation to Grow Annualized 0.7% for Second Consecutive Month

Trading the News: Euro-Zone Consumer Price Index (CPI)

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EURUSD M5: 19 pips price movement by EUR - CPI Flash Estimate news event :

- Canada Gross Domestic Product (GDP) to Slow for Second-Time in 2014.
- Growth Rate to Hold Above 2% for Second Consecutive Quarter.

Trading the News: Canada Gross Domestic Product (GDP)

Canada’s 3Q Gross Domestic Product (GDP) report may generate a near-term bounce in USD/CAD as the growth rate is expected to increase an annualized 2.1% following the 3.1% expansion during the three-months through June.

What’s Expected:

Why Is This Event Important:

A marked slowdown in economic activity may undermine the appeal of the Canadian dollar as the Bank of Canada (BoC) remains reluctant to further normalize monetary policy, and the USD/CAD may continue to track higher in December as Governor Stephen Poloz continues to talk down interest rate expectations.

Expectations: Bearish Argument/Scenario

Release	Expected	Actual
International Securities Transactions (SEP)	7.00B	4.37B
Housing Starts (OCT)	200.0K	183.6K
Ivey Purchasing Manager Index s.a. (OCT)	57.3	51.2

Easing demand for Canadian assets paired with the ongoing slowdown in the housing market may continue to drag on the growth rate, and a dismal GDP print may spur a near-term breakout in USD/CAD as it gives the BoC greater scope to retain a wait-and-see approach for an extended period of time.

Risk: Bullish Argument/Scenario

Release	Expected	Actual
Retail Sales (MoM) (SEP)	0.5%	0.8%
Manufacturing Sales (MoM) (SEP)	1.0%	2.1%
Net Change in Employment (OCT)	-5.0K	43.1K

However, the resilience in private sector consumption along with the pickup in job growth may foster a faster rate of growth, and a better-than-expected GDP figure may generate a further decline in USD/CAD as it retains the descending channel formation from earlier this month.

How To Trade This Event Risk

Bearish CAD Trade: 3Q GDP Slows to 2.1% or Lower

• Need green, five-minute candle following a dismal GDP report to consider long USD/CAD entry
• If the market reaction favors a bearish Canadian dollar trade, establish long USD/CAD 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 Growth Rate Exceeds 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 Chart

• Need a break of the bearish trends in price & the RSI to revert back to the approach of looking for opportunities to buy-dips.
• Interim Resistance: 1.1370 (23.6% retracement) to 1.1380 (78.6% expansion)
• Interim Support: 1.1155 (78.6% retracement) to 1.1165 (23.6% expansion)

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

Period	Data Released	Survey	Actual	Pips Change (1 Hour post event )	Pips Change (End of Day post event)
2Q 2014	08/29/2014 12:30 GMT	2.7%	3.1%	- 7	+ 30

The Canadian economy grew more-than-expected, with the growth rate climbing an annualized 3.1% in the second quarter after expanding 2.3% during the first three-months of 2014. The larger-than-expected pickup in 2Q GDP showed a broad-based pickup in nearly all segments, especially in exports and consumer spending. As a result, the Bank of Canada (BoC) may come under increased pressure to raise the benchmark interest rate sooner rather than later especially as the region faces the highest rate of inflation amongst the G10 countries. The loonie strengthened against its U.S. counterpart following the release, but the market reaction was cut short during the North American trade as pair ended the day at 1.0876.

--- Written by David Song, Currency Analyst and Shuyang Ren


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Originally Posted by TheNews

- Canada Gross Domestic Product (GDP) to Slow for Second-Time in 2014.
- Growth Rate to Hold Above 2% for Second Consecutive Quarter.

Trading the News: Canada Gross Domestic Product (GDP)

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USDCAD M5: 58 pips price movement by CAD - GDP news event :

- European Central Bank (ECB) to Keep Rates on Hold Ahead of T-LTRO.
- Will ECB Show a Greater Willingness for Quantitative Easing?

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

EUR/USD may continue to mark fresh monthly lows over the next 24-hours of trade should the European Central Bank (ECB) take additional steps to further support the monetary union.

What’s Expected:

Why Is This Event Important:

Indeed, there’s growing speculation that the Governing Council will broaden the scope of its non-standard measures while implementing a large-scale quantitative easing (QE) program to better achieve its one and only mandate for price stability, and the single currency remains at risk of facing additional headwinds in 2015 as the outlook for growth and inflation remains subdued.

Expectations: Bearish Argument/Scenario

Release	Expected	Actual
Producer Price Index (MoM) (OCT)	-0.3%	-0.4%
Retail Sales (MoM) (OCT)	0.5%	0.4%
Consumer Price Index Core (YoY) (NOV A)	0.7%	0.7%

Waning inflation expectations paired with the persistent slack across the monetary union may prompt the ECB to further embark on its easing cycle, and we may see ECB President Mario Draghi continue to strike a dovish tone in 2015 in an effort to encourage a more sustainable recovery.

Risk: Bullish Argument/Scenario

Release	Expected	Actual
Economic Confidence (NOV)	100.3	100.8
Trade Balance s.a. (SEP)	16.0B	17.7B
Gross Domestic Product s.a. (QoQ) (3Q A)	0.1%	0.2%

Nevertheless, the ECB may merely reiterate the policy statement from the November 6 meeting as the central bank gauges the impact of the targeted Long-Term Refinancing Operations (T-LTRO), and we may see a relief rally in EUR/USD should the Governing Council make an attempt to buy more time.

How To Trade This Event Risk

Bearish EUR Trade: ECB Implements Additional Monetary Support

• Need red, five-minute candle following the updated forward-guidance to consider a short EUR/USD trade
• If market reaction favors a short Euro 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 Looks to Buy More Time

• 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 Release
EUR/USD Daily Chart

• Will retain the approach to sell-bounces in EUR/USD as the bearish RSI break takes shape.
• Interim Resistance: 1.2600 pivot to 1.2610 (61.8% expansion)
• Interim Support: 1.2280 (100% expansion) to 1.2290 (38.2% expansion)

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)
NOV 2014	11/06/2014 11:45 GMT	0.05%	0.05%	-99	-149

The European Central Bank (ECB) held the benchmark rate steady at the record low of 0.05% for another month, while pledging to provide additional monetary stimulus if needed amid the weakening outlook for growth and inflation. Moreover, ECB President Mario Draghi noted that the ECB will start buying asset-backed securities (ABS) in the coming days and may look to incorporate purchases of private-sector debt and even government bonds in order to achieve a EUR 1T expansion of its balance sheet. As a result, the ECB may sound increasingly dovish going into 2015 as the central bank struggles to achieve its one and only mandate for price stability. The dovish-twist to the forward-guidance dragged on the Euro, with EUR/USD sliding below the 1.2400 handle to end the day at 1.2370.

--- Written by David Song, Currency Analyst and Shuyang Ren


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- U.S. Non-Farm Payrolls (NFP) to Expand 200+K for Tenth Time in 2014.
- Jobless Rate to Hold at 5.8% for Second Consecutive Month.

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

The U.S. Non-Farm Payrolls (NFP) report may spark a bearish reaction in EUR/USD as market participants expected another 230K rise in employment paired with an uptick in wage growth.

What’s Expected:

Why Is This Event Important:

A batch of positive developments may spark another near-term rally in the greenback especially as a growing number of Fed officials show a greater willingness to normalize monetary policy in 2015.

Expectations: Bullish Argument/Scenario

Release	Expected	Actual
Challenger Job Cuts (YoY) (NOV)	--	-20.7%
Durable Goods Orders (OCT)	-0.6%	0.4%
Gross Domestic Product (Annualized) (QoQ) (3Q S)	3.3%	3.9%

The decline in planned job cuts along with the pickup in economic activity may generate a strong employment report, and the dollar may continue to outperform against its major counterparts over the near to medium-term amid growing bets for higher borrowing-costs in the U.S.

Risk: Bearish Argument/Scenario

Release	Expected	Actual
ISM Non-Manufacturing Employment (NOV)	--	56.7
ADP Employment Change (NOV)	222K	208K
ISM Manufacturing Employment (OCT)	--	54.9

However, the employment report may disappoint amid the ongoing slack in the labor market, and the greenback may face a larger correction over the near-term as a weaker-than-expected NFP print drags on interest rate expectations.

How To Trade This Event Risk

Bullish USD Trade: Strong Job/Wage Growth Boosts Interest Rate Expectations

• Need red, five-minute candle following the release to consider a short trade on EUR/USD
• If market reaction favors a long dollar position, 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: NFP Report Falls Short of Market Forecasts

• 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

• Will retain the approach to sell-bounces in EUR/USD as price & RSI preserve the bearish trend.
• Interim Resistance: 1.2600 pivot to 1.2610 (61.8% expansion)
• Interim Support: 1.2280 (100% expansion) to 1.2290 (38.2% expansion)

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)
OCT 2014	11/07/2014 13:30 GMT	235K	214K	+21	+66

October 2014 U.S. Non-Farm Payrolls

EURUSD M5: 83 pips pips range price movement by USD - Non-Farm Employment Change news event

GBPUSD M5: 70 pips range price movement by USD - Non-Farm Employment Change news event

USDCAD M5: 99 pips price range movement by USD - Non-Farm Employment Change news event

U.S. Non-Farm Payrolls (NFPs) increased another 214K in October following a revised 256K expansion the month prior, marking the consecutive 9th month with an employment increase over 200K. Despite the weaker-than-expected print, the unemployment rate unexpectedly slipped to an annualized 5.8% from 5.9% during the same period to mark the lowest reading since August 2008. Moreover, the report continued to highlight anemic wage growth as Average Hourly Earnings held steady at 2.0%, and the subdued outlook for inflation may encourage the Fed to retain its highly accommodative policy stance for an extended period of time in an effort to foster a stronger recovery. The greenback largely struggled to hold its ground following the mixed print as EUR/USD held above the 1.2400 handle going into the European close, with the pair ending the day at 1.2453.

--- Written by David Song, Currency Analyst and Shuyang Ren


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Originally Posted by TheNews

- U.S. Non-Farm Payrolls (NFP) to Expand 200+K for Tenth Time in 2014.
- Jobless Rate to Hold at 5.8% for Second Consecutive Month.

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

The U.S. Non-Farm Payrolls (NFP) report may spark a bearish reaction in EUR/USD as market participants expected another 230K rise in employment paired with an uptick in wage growth.

...

AUDUSD M5: 53 pips price movement by USD - Non-Farm Employment Change news event :

USDJPY M5: 88 pips price movement by USD - Non-Farm Employment Change news event :

EURUSD M5: 87 pips price movement by USD - Non-Farm Employment Change news event :

GBPUSD M5: 58 pips price movement by USD - Non-Farm Employment Change news event :