Trading News Events

- U.S. Advance Retail Sales to Increase for Ninth-Time in 2014.
- Will Seasonal Factors Spur Better-Than-Expected Retail Sales Report?

Trading the News: U.S. Advance Retail Sales

A pickup in Advance U.S. Retail Sales may generate short-term decline in EUR/USD as stronger consumption raises the growth and inflation outlook for the world’s largest economy.

What’s Expected:

Why Is This Event Important:

Indeed, an expansion in household spending is likely to heighten the appeal of the greenback and boost interest rate expectations as a growing number of Fed officials show a greater willingness to normalize monetary policy in mid-2015.

Expectations: Bullish Argument/Scenario

Release	Expected	Actual
Non-Farm Payrolls (NOV)	230K	321K
Average Weekly Earnings (YoY) (NOV)	2.1%	2.1%
Personal Consumption (3Q P)	1.9%	2.2%

Stronger wage growth paired with the ongoing improvement in the labor market may spur a further pickup in private sector consumption, and a positive sales report may spur a bullish dollar reaction amid growing bets for a Fed rate hike in the year ahead.

Risk: Bearish Argument/Scenario

Release	Expected	Actual
Consumer Credit (OCT)	$16.500B	$13.226B
Personal Consumption Expenditure Core (YoY) (OCT)	1.5%	1.6%
Consumer Price Index Core (YoY) (OCT)	1.7%	1.8%

However, sticky inflation along with the slowdown in private sector credit may drag on household spending, and a dismal development may foster a more meaningful rebound in EUR/USD as it raises the FOMC’s scope to zero-interest rate policy (ZIRP) for an extended period of time.

How To Trade This Event Risk

Bullish USD Trade: U.S. Retail Sales Climbs 0.4% or More

• Need red, five-minute candle following the release 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: Private-Sector Consumption Falls Short of Market Forecast

• 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 Chart

• Despite the string of lower-highs, a bullish break in the Relative Strength Index (RSI) may highlight a larger for EUR/USD.
• 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. Retail Sales 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	11/14/2014 13:30 GMT	0.2%	0.3%	-17	+85

U.S. Retail Sales increased 0.3% from the month prior, with 10 of the 13 components showing an expansion in October. Despite stagnant wage growth, the resilience in private sector consumption may put increased pressure on the Fed to normalize monetary policy as it remains one of the leading drivers of growth. The initial reaction to the better-than-expected print was short-lived as EUR/USD climbed above the 1.2500 region during the North American trade to end the day at 1.2521.

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


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- U. of Michigan Confidence Survey to Increase for Fifth Consecutive Month.
- Print of 89.5 Would Mark Highest Print Since July 2007.

Trading the News: U. of Michigan Confidence

Another uptick in the U. of Michigan Confidence survey may spur a further decline in the EUR/USD amid growing speculation for a Fed rate hike in mid-2015.

What’s Expected:

Why Is This Event Important:

Positive data prints coming out of the U.S economy should continue to fuel interest rate expectations and heighten the bullish sentiment surrounding the greenback as a growing number of Fed officials scale back their dovish tone for monetary policy.

Expectations: Bullish Argument/Scenario

Release	Expected	Actual
Advance Retail Sales (MoM) (NOV)	0.4%	0.7%
Non-Farm Payrolls (NOV)	230K	321K
Average Weekly Earnings (YoY) (NOV)	2.1%	2.1%

Consumer sentiment may climb to a seven-year high on the back of faster job/wage growth, and a further improvement may generate another decline in EUR/USD amid the deviation in the policy outlook.

Risk: Bearish Argument/Scenario

Release	Expected	Actual
Consumer Credit (OCT)	$16.500B	$13.226B
Personal Consumption Expenditure Core (YoY) (OCT)	1.5%	1.6%
Consumer Price Index Core (YoY) (OCT)	1.7%	1.8%

However, we the survey may disappoint as U.S. households face sticky price pressures paired with the ongoing slack in the real economy, and a dismal print may spur a larger correction in the greenback as it drags on expectations for higher borrowing-costs.

How To Trade This Event Risk

Bullish USD Trade: U. of Michigan Survey Climbs to 89.5 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: Consumer Confidence Falls Short of Market Forecast

• 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 Chart

• Failed attempts to close above 1.2450-70 may highlight near-term topping process for EUR/USD especially as the RSI largely retains a bearish momentum.
• 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. 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)
NOV P 2014	11/14/2014 14:55 GMT	87.5	89.4	+52	+100

The U. of Michigan Confidence survey unexpectedly surged to 89.4 in November from 86.9 the month prior to mark the fourth consecutive advance. Despite the uptick in sentiment, 12-month inflation expectations weakened further during the same period, with the figure slowing to an annualized 2.6% from 2.9% in October. Nevertheless, the ongoing improvement may highlight a stronger recovery for the U.S. economy as private-sector consumption remains one of the leading drivers of growth. The initial bullish dollar reaction was very short-lived as EUR/USD pushed back above the 1.2450 region following the data print, with the pair ending the day at 1.2521.

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


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Originally Posted by TheNews

- U. of Michigan Confidence Survey to Increase for Fifth Consecutive Month.
- Print of 89.5 Would Mark Highest Print Since July 2007.

Trading the News: U. of Michigan Confidence

...

- Canada Consumer Price Index (CPI) to Hold Above 2% Target for Eighth Consecutive Month.
- Core Inflation to Climb Annualized 2.5% to Mark the Fastest Pace of Growth Since February 2012.

Trading the News: Canada Consumer Price Index (CPI)

A slowdown in Canada’s Consumer Price Index (CPI) may spur fresh monthly highs in USD/CAD especially as the Bank of Canada (BoC) remains reluctant to further normalize monetary policy.

What’s Expected:

Why Is This Event Important:

However, another uptick in the core rate of inflation may heighten the appeal of the loonie as sticky price growth undermines the BoC’s scope to retain the current policy, and Governor Stephen Poloz may sound increasingly hawkish in 2015 as the central bank head highlights the broadening recovery in the Canadian economy.

Expectations: Bearish Argument/Scenario

Release	Expected	Actual
Existing Home Sales (MoM) (NOV)	--	0.0%
Industrial Product Price (MoM) (OCT)	-0.4%	-0.5%
Raw Materials Price Index (MoM) (OCT)	-2.5%	-4.3%

Lower input costs paired with the slowdown in the housing market may trigger a sharp slowdown in price growth, and a dismal CPI print may heighten the bearish sentiment surrounding the Canadian dollar as it drags on interest rate expectations.

Risk: Bullish Argument/Scenario

Release	Expected	Actual
Gross Domestic Product (Annualized) (3Q)	2.1%	2.8%
Retail Sales (MoM) (SEP)	0.5%	0.8%
Ivey Purchasing Managers Index s.a. (NOV)	52.5	56.9

However, the pickup in economic activity along with the expansion in private sector consumption may produce a stronger-than-expected inflation report, and sticky price pressures may generate a near-term pullback in USD/CAD as it fuels bets for a BoC rate hike.

How To Trade This Event Risk

Bearish CAD Trade: Headline & Core Inflation Miss Market Forecast

• Need green, five-minute candle following a dismal CPI report to consider long USD/CAD entry
• If the market reaction favors a bearish Canadian dollar trade, establish long with two position
• Set stop at the near-by swing low/reasonable distance from cost; use at least 1:1 risk-to-reward
• Move stop to entry on remaining position once initial target is hit, set reasonable limit

Bullish CAD Trade: Canada CPI Highlights Stronger Price Pressures

• 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

• USD/CAD may have carved a near-term top in December as the RSI quickly turns around from overbought territory.
• Interim Resistance: 1.1700 pivot to 1.1715 (100% expansion)
• Interim Support: 1.1470 (50% expansion) to 1.1480 (38.2% 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)
OCT 2014	11/21/2014 12:30 GMT	2.1%	2.4%	-27	-29

Canada’s Consumer Price Index (CPI) unexpectedly jumped to an annualized rate of 2.4% in October from 2.0% the month prior, while the core rate of inflation increased 2.1% to mark the highest reading since March 2012. Even though price growth holds above the Bank of Canada’s (BoC) 2% inflation target for the seventh consecutive months, it seems the central bank remains in no rush to further normalize monetary policy amid the weakening outlook for global growth paired with the decline in energy prices. The loonie strengthened against its U.S. counterpart following the better-than-expected print, with USD/CAD dipping below the 1.1200 handle following the release. However, the market reaction was short-lived as dollar-loonie worked its way back towards 1.1250 during the North America trade, with the pair closing the day at 1.1290.


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


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Originally Posted by TheNews

- Canada Consumer Price Index (CPI) to Hold Above 2% Target for Eighth Consecutive Month.
- Core Inflation to Climb Annualized 2.5% to Mark the Fastest Pace of Growth Since February 2012.

Trading the News: Canada Consumer Price Index (CPI)

A slowdown in Canada’s Consumer Price Index (CPI) may spur fresh monthly highs in USD/CAD especially as the Bank of Canada (BoC) remains reluctant to further normalize monetary policy.

Consumer Price Index, November 2014 (official report)

The Consumer Price Index (CPI) rose 2.0% in the 12 months to November, following a 2.4% increase in October.

The slower year-over-year rise in the CPI was mainly attributable to gasoline prices, which fell 5.9% in the 12 months to November, after rising 0.6% in October.

On a monthly basis, the gasoline price index declined 7.5% in November, marking its fifth consecutive monthly decrease. In November, gasoline prices were at their lowest level since February 2011.
Gasoline prices fell in all provinces on a year-over-year basis in November. Prince Edward Island recorded the largest decline, while British Columbia posted the smallest.

Prices increased in seven of the eight major components in the 12 months to November. Higher shelter and food costs led the rise in the CPI, while the transportation index was the only major component to decline year over year in November.

- U.S. Consumer Price Index (CPI) to Mark Slowest Pace of Growth Since 2009.
- Core Rate of Inflation to Hold at Annualized 1.7% for Second Month.

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

A marked slowdown in the U.S. Consumer Price Index (CPI) may trigger a short-term squeeze in EUR/USD should the development dampen the Federal Open Market Committee’s (FOMC) scope to normalize monetary policy sooner rather than later.

What’s Expected:

Why Is This Event Important:

Despite expectations for a rate hike in mid-2015, the Fed may sound increasingly cautious and preserve its highly accommodative policy stance beyond schedule as the central bank struggles to achieve its mandate for price stability.

Expectations: Bearish Argument/Scenario

Release	Expected	Actual
Advance Retail Sales (MoM) (DEC)	-0.1%	-0.9%
Average Hourly Earnings (YoY) (DEC)	2.2%	1.7%
Durable Goods Orders (NOV)	3.0%	-0.7%

Subdued wages along with the recent slowdown in private sector consumption may prompt U.S. firms to further discount consumer prices, and a weak inflation print may undermine the bullish sentiment surrounding the dollar as it drags on interest rate expectations.

Risk: Bullish Argument/Scenario

Release	Expected	Actual
Producer Price Index ex Feed, Energy (YoY) (DEC)	1.0%	1.1%
NFIB Small Business Optimism (DEC)	98.5	100.4
Gross Domestic Product (Annualized) (QoQ) (3Q F)	4.3%	5.0%

Nevertheless, improved business confidence paired with the pickup in economic activity may limit the downside risk for price growth, and the stickiness in core inflation may heighten the appeal of the greenback as a growing number of central bank officials show a greater willingness to normalize monetary in 2015.

How To Trade This Event Risk

Bearish USD Trade: U.S. CPI Slips to Annualized 0.7% or Lower

• 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

Bullish USD Trade: Inflation Report Exceeds Market Forecast

• 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

• EUR/USD remains at risk for a further decline as long as the RSI pushes deeper into oversold territory.
• Interim Resistance: 1.1840-50 (50% expansion)
• Interim Support: 1.1500 pivot to 1.1565 (weekly low)

Impact that the U.S. CPI 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)
NOV 2014	12/17/2014 13:30 GMT	1.4%	1.3%		-116

November 2014 U.S. Consumer Price Index

AUDUSD M5: 12 pips price movement by USD - CPI news event:

EURUSD M5: 13 pips price movement by USD - CPI news event:

The U.S. Consumer Price Index (CPI) slowed to an annualized rate of 1.3% from 1.7% in October on the back of falling energy prices, with the core rate of inflation narrowing to 1.7% from 1.8% during the same period. Indeed, subdued price pressures raise the risk of seeing the Fed further delay its first rate hike, but it seems as though the central bank will normalize monetary policy in 2015 as the committee anticipate the drop in oil prices to have an positive impact on the real economy. Despite the initial tick higher in EUR/USD, the dollar remained resilient against its European counterpart as the pair slipped below the 1.2400 handle during the North American trade to end the day at 1.2343.

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


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- European Central Bank (ECB) Widely Expected to Announce Quantitative Easing (QE) Program.
- Will ECB Share the Risk & Get Local Central Banks Involved?

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

EUR/USD may face fresh monthly lows over the next 24-hours of trade as the European Central Bank (ECB) is widely expected to announce more non-standard measures to further mitigate the risk for deflation.

What’s Expected:

Why Is This Event Important:

Despite headlines for a EUR 50B/month asset-purchase program, the details surrounding the new initiative may play a greater role in driving EUR/USD especially as the Governing Council struggles to achieve its one and only mandate for price stability.

Expectations: Bearish Argument/Scenario

Release	Expected	Actual
Producer Price Index (YoY) (NOV)	-1.4%	-1.6%
Consumer Price Index (YoY) (DEC A)	-0.1%	-0.2%
Purchasing Manager Index Composite (DEC F)	51.7	51.4

Indeed, the heightening risk for deflation may prompt the ECB to further embark on its easing cycle, and the central bank may keep the door open to implement additional monetary support over the near to medium-term in an effort to encourage a more sustainable recovery.

Risk: Bullish Argument/Scenario

Release	Expected	Actual
ZEW Survey (JAN)	--	45.2
Retail Sales (MoM) (NOV)	0.2%	0.6%
Sentix Investor Confidence (JAN)	-1.0	0.9

However, the ECB may provide limited details and make an attempt to buy more time as President Mario Draghi struggles to produce a unanimous vote within the Governing Council, and we may see a more meaningful rebound in EUR/USD should the central bank disappoint.

How To Trade This Event Risk

Bearish EUR Trade: ECB Unveils Open-Ended QE Program

• Need red, five-minute candle following the policy announcement 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 Attempts 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

• Despite the string of closing prices above the 1.1500 handle, downside targets remain favored for EUR/USD as the RSI retains the bearish momentum and holds in oversold territory.
• Interim Resistance: 1.1720 (23.6% retracement) to 1.1740 (161.8% expansion)
• Interim Support: 1.1458 (January low) to 1.1500 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)
DEC 2014	12/04/2014 12:45 GMT	0.05%	0.05%	+41	+65

December 2014 European Central Bank Interest Rate Decision

EURUSD M5: 117 pips range price movement by EUR - ECB Press Conference news event

As expected, the European Central Bank (ECB) kept the benchmark rate at the record low of 0.05%, but announced it would consider a broad-based asset purchase program which could including sovereign debt next month in order to achieve a EUR 1T expansion in its balance sheet. At the same time, the ECB also lowered its economic outlook of the euro-area, with the central bank lowering its 2014/2015 forecasts for growth and inflation. Despite the dovish remarks, the Euro strengthened after the statement as the ECB further delays the QE program, with EUR/USD closing the day at 1.2376.

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


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- Canada Consumer Price Index (CPI) to Slip Below 2% Target for First Time Since March 2014.
- Core Inflation to Uptick to Annualized 2.3%- Highest Print for 2014.

Trading the News: Canada Consumer Price Index (CPI)

A slowdown in Canada’s Consumer Price Index (CPI) may spur fresh monthly highs in USD/CAD especially as the Bank of Canada (BoC) reverts back to its easing cycle.

What’s Expected:

Why Is This Event Important:

After unexpectedly cutting the benchmark interest rate at the January 21 meeting, a marked slowdown in Canada price growth may put increased pressure on the BoC to further reduce borrowing costs, and the Canadian dollar remains at risk of facing more headwinds over the near to medium-term as Governor Stephen Poloz keeps the door open to implement additional monetary support.

Expectations: Bearish Argument/Scenario

Release	Expected	Actual
Business Outlook Future Sales (4Q)	29.00	8.00
Net Change in Employment (DEC)	15.0K	-4.3K
Raw Materials Price Index (NOV)	-4.7%	-5.8%

Waning business sentiment paired with falling input costs may continue to drag on consumer prices, and a marked slowdown in price growth may fuel bets for another rate cut as the BoC adopts a highly dovish tone for monetary policy.

Risk: Bullish Argument/Scenario

Release	Expected	Actual
Ivey Purchasing Manager Index s.a. (DEC)	53.0	55.4
Gross Domestic Product (MoM) (OCT)	0.1%	0.3%
Retail Sales (MoM) (OCT)	-0.3%	0.0%

Nevertheless, the pickup in economic activity may generate a stronger-than-expected CPI print, and an uptick in the core rate of inflation may spur a near-term correction in USD/CAD as the stickiness limits the BoC’s scope to further reduce the benchmark interest rate.

How To Trade This Event Risk

Bearish CAD Trade: Weak CPI Print Drags on Interest Rate Expectations

• Need green, five-minute candle following a dismal CPI report to consider long USD/CAD entry
• If the market reaction favors a bearish Canadian dollar trade, establish long with two position
• Set stop at the near-by swing low/reasonable distance from cost; use at least 1:1 risk-to-reward
• Move stop to entry on remaining position once initial target is hit, set reasonable limit

Bullish CAD Trade: Sticky Core Inflation Dampens Bets for Another Rate Cut

• 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

• Bullish RSI structure continues to favor the approach to buy-dips in USD/CAD especially as the oscillator pushes deeper into overbought territory.
• Interim Resistance: 1.2390 (161.8% expansion) to 1.2430 (1.618% expansion)
• Interim Support: 1.1990 (78.6% expansion) to 1.2000 pivot

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)
NOV 2014	12/19/2014 13:30 GMT	2.2%	2.0%	-2	+1

November 2014 Canada Consumer Price Index (CPI)
USDCAD M5: 28 pips price movement by CAD - CPI news event

Canada’s Consumer Price Index (CPI) slowed to an annualized rate of 2.0% in November from 2.4% the month prior, while the core rate of inflation slipped to 2.1% from 2.3% during the same period. Indeed, falling energy prices attributed to a 1.7% decline in transportation costs, but we may see Canadian firms continue to offer discounted prices in an effort to draw greater demand. As a result, the Bank of Canada (BoC) may further delay normalizing monetary policy, and Governor Stephen Poloz may continue to endorse the accommodative policy stance over the near to medium-term in order to encourage a stronger recovery. The market reaction was short-lived as USD/CAD quickly slipped back below the 1.1625 region, and the pair continued to consolidate throughout the North American trade as it ended the day at 1.1602.

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


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- U.S. Economy to Expand for Third Straight Quarter in 2014.
- Personal Consumption to Grow 4.0%- Would Mark Biggest Advance Since 4Q 2010.

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

The advance U.S. 4Q Gross Domestic Product (GDP) report may generate a larger rebound in EUR/USD should the fresh batch of data highlight a slowing recovery in the world’s largest economy.

What’s Expected:

Why Is This Event Important:

Even though the Federal Open Market Committee (FOMC) is widely expected to raise the benchmark interest rate in mid-2015, a dismal GDP print may push the central bank to further delay its normalization cycle especially as it struggles to achieve the 2% target for inflation.

Expectations: Bearish Argument/Scenario

Release	Expected	Actual
Durable Goods Orders (DEC)	0.3%	-3.4%
Advance Retail Sales (MoM) (DEC)	-0.1%	-0.9%
Average Hourly Earnings (YoY) (DEC)	2.2%	1.7%

Subdued wages paired with the recent contraction in private consumption may generate a marked slowdown in economic activity, and a weaker-than-projected growth rate may undermine the bullish sentiment surrounding the dollar as it drags on interest rate expectations.

Risk: Bullish Argument/Scenario

Release	Expected	Actual
Consumer Confidence (JAN)	95.5	102.9
NFIB Small Business Confidence (DEC)	98.5	100.4
Non-Farm Payrolls (DEC)	240K	252K

Nevertheless, improved confidence along with the ongoing recovery in the labor market may prompt a strong GDP figure, and a positive development may promote a further decline in EUR/USD amid the deviation in the policy outlook.

How To Trade This Event Risk

Bearish USD Trade: 4Q GDP Fails to Meet Market Expectations

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

Bullish USD Trade: Growth Rate Expands 3.0% or Greater

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

Potential Price Targets For The Release
EUR/USD Daily

• Keeping a close eye on the RSI as it continues to flirt with the 30 level; rebound from oversold territory to favor a larger rebound for EUR/USD.
• Interim Resistance: 1.1440 (23.6% retracement) to 1.1470 (78.6% expansion)
• Interim Support: 1.1096 (January low) to 1.1100 pivot

Impact that the U.S. GDP 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)
3Q A 2014	10/30/2014 12:30 GMT	3.0%	3.5%	+12	+19

3Q 2014 U.S. Gross Domestic Product (GDP)
EURUSD M5: 36 pips price movement by USD - GDP news event :

The U.S. economy advanced more-than-expected in the third-quarter, with the growth rate expanding another annualized 3.5% following the 4.6% expansion during the three-months through June. At the same time, Personal Consumption climbed 1.8% during the same period amid forecasts for a 1.9% print, while the core Personal Consumption Expenditure (PCE) narrowed to 1.4% from 2.0% in the second-quarter. Despite the better-than-expected GDP print, the Fed appears to be in no rush to normalize monetary policy as it struggles to achieve the 2% target for inflation. The initial reaction in EUR/USD was short-lived as the pair snapped back from the 1.2550 region, with the pair ending the day at 1.2602.

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


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- U.S. Non-Farm Payrolls (NFP) to Expand 200+K for Twelve Consecutive Months.
- Average Hourly Earnings to Show the First Uptick Since July 2014.

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

A 230K rise in U.S. Non-Farm Payrolls (NFP) accompanied by faster wage growth may heighten the appeal of the greenback and spur a short-term selloff in EUR/USD as it boosts expectations of seeing the Federal Open Market Committee (FOMC) normalize monetary policy in mid-2015.

What’s Expected:

Why Is This Event Important:

Indeed, a further improvement in labor dynamics may put increased pressure on the Fed to raise the benchmark interest rate sooner-rather-than-later, but the subdued outlook for inflation may prompt the central bank to further delay its normalization cycle as price/wage growth remains weak.

Expectations: Bullish Argument/Scenario

Release	Expected	Actual
Personal Consumption (4Q A)	4.0%	4.3%
New Home Sales (MoM) (DEC)	2.7%	11.6%
NFIB Small Business Optimism (DEC)	98.5	100.4

Improved business confidence along with the expansion in the housing market may generate a marked pickup in U.S. employment, and a positive development may heighten the bullish sentiment surrounding the greenback as a growing number of Fed official show a greater willingness to normalize monetary later this year.

Risk: Bearish Argument/Scenario

Release	Expected	Actual
Challenger Job Cuts (YoY) (JAN)	--	17.6%
Personal Spending (DEC)	-0.2%	-0.3%
Advance Retail Sales (DEC)	-0.1%	-0.9%

However, the rise in planned job-cuts paired with the slowdown in private-sector consumption may generate a weaker-than-expected NFP print, and a dismal employment report may generate a larger correction in EUR/USD as it drags on interest rate expectations.

How To Trade This Event Risk

Bullish USD Trade: Job/Wage Growth Exceeds Market 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: U.S. Employment Report Disappoints

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

Potential Price Targets For The Release
EUR/USD Daily

• Long-term outlook for EUR/USD remains bearish as the RSI retains the downward trend carried over from back in October 2013.
• Interim Resistance: 1.1600 pivot to 1.6110 (61.8% expansion)
• Interim Support: 1.1300 (161.8% expansion) to 1.1310 (100% 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)
DEC 2014	01/09/2015 13:30 GMT	240K	252K	-35	+25

December 2014 U.S. Non-Farm Payrolls
EURUSD M5: 46 pips price movement by USD - Non-Farm Employment Change news event :

U.S. Non-Farm Payrolls (NFPs) beat market forecasts as the economy added 252K jobs in December following an upwardly revised 353K expansion the month prior. At the same time, the unemployment rate narrowed more-than-expected to an annualized 5.6% to mark the lowest reading since August 2008. However, Average Hourly Earnings unexpectedly slowed to 1.7% during the same period amid forecasts for a 2.2% print, and the weakening outlook for inflation may push the Fed to further delay its normalization cycle as it struggles to achieve the 2% target for price growth. Nevertheless, the initial bullish reaction in the greenback was short-lived as EUR/USD worked its way back above the 1.1800 handle, with the pair ending the day at 1.1839.

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


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