Trading News Events

- U.S. Advance Retail Sales to Contract for Second Consecutive Month.
- Will Lower Energy Prices Help Boost Private-Sector Consumption?

Trading the News: U.S. Advance Retail Sales

Another contraction in U.S. Retail Sales may drag on the greenback and generate a near-term rebound in EUR/USD as it dampens the Fed’s scope to raise the benchmark interest rate in mid-2015.

What’s Expected:

Why Is This Event Important:

The Fed may have little choice but to further delay its normalization cycle as lower energy costs show little evidence of boosting private-sector consumption, and we may see the central bank implement a more dovish twist to the forward-guidance for monetary policy as it struggles to achieve the 2% target for inflation.

Expectations: Bearish Argument/Scenario

Release	Expected	Actual
Consumer Credit (DEC)	$15.000B	$14.755B
Personal Spending (DEC)	-0.2%	-0.3%
Gross Domestic Product (Annualized) (QoQ) (4Q A)	3.0%	2.6%

The ongoing slowdown in private-sector lending may weigh on household consumption, and a dismal retail sales report may undermine the bullish sentiment surrounding the dollar as it drags on interest rate expectations.

Risk: Bullish Argument/Scenario

Release	Expected	Actual
Non-Farm Payrolls (JAN)	228K	257K
Average Hourly Earnings (YoY) (JAN)	1.9%	2.2%
Personal Income (DEC)	0.2%	0.3%

Nevertheless, the pickup in job/wage growth may pave the way for a better-than-expected print, and a positive development may spark a bearish reaction in EUR/USD as market participants ramp up bets for higher borrowing-costs.

How To Trade This Event Risk

Bearish USD Trade: U.S. Retail Sales Falls Another 0.4% or Greater

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

Bullish USD Trade: Private Consumption Exceeds Market Forecast

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

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: 1.1096 (2015 low) to 1.1100 pivot

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)
DEC 2014	01/14/2014 13:30 GMT	-0.1%	-0.9%	+30	-1

U.S. Retail Sales contracted 0.9% in December, largely driven by lower gas receipts, after climbing a revised 0.4% the month prior. Despite the worse-than-expected print, it seems as though the Fed remains confident in raising the benchmark interest rate in mid-2015 as the central bank anticipates falling oil prices to have a positive impact on the economy as it boosts disposable incomes. Nevertheless, the dollar struggled to hold its ground following the print, with EUR/USD climbing above the 1.1825 region, but the market reaction was short-lived as the pair consolidated throughout the North America trade to end the day at 1.1773.

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

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- U.K. Jobless Claims to Contract for 27th Consecutive Month in January.
- Wage Growth to Expand an Annualized 1.7% for Second Straight Month.

Trading the News: U.K. Jobless Claims Change

Another 25.0K contraction in U.K. Jobless Claims may encourage an improved outlook for the real economy, but the lack of stronger wage growth may generate a limited market reaction in GBP/USD as the Bank of England (BoE) remains in no rush to normalize monetary policy.

What’s Expected:

Why Is This Event Important:

As a result, the BoE may retain a wait-and-see approach throughout the first-half of 2015, and we may continue to see a unanimous vote to preserve the current policy until there’s a sharp rise in household earnings.

Expectations: Bullish Argument/Scenario

Release	Expected	Actual
GfK Consumer Confidence (JAN)	-2	1
Retail Sales ex Auto (MoM) (DEC)	-0.7%	0.2%
CBI Business Optimism (JAN)	--	15

Improved confidence paired with the resilience in private consumption may generate a stronger-than-expected job/wage growth report, and a positive development may spur a bullish reaction in GBP/USD as it boosts interest rate expectations.

Risk: Bearish Argument/Scenario

Release	Expected	Actual
Construction Output s.a. (MoM) (DEC)	2.7%	0.4%
Industrial Production (MoM) (DEC)	-0.1%	-0.2%
Gross Domestic Product (QoQ) (4Q A)	0.6%	0.5%

However, waning business outputs along with the slowdown in building activity may drag on hiring, and a dismal employment report may trigger a near-term pullback in the British Pound as it raises the BoE’s scope to retain the highly accommodative policy stance for an extended period of time.

How To Trade This Event Risk

Bullish GBP Trade: Claims Decline 25.0K or Greater Accompanied by Stronger Wages

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

Bullish GBP Trade: Job/Wage Growth Report Misses Market Expectations

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

Potential Price Targets For The Release
GBP/USD Daily Chart

• GBP/USD looks poised for a larger recover as it breaks out of the bearish trend/momentum carried over from back in July.
• Interim Resistance: 1.5500 pivot to 1.5520 (38.2% expansion)
• Interim Support: 1.5250 (100% expansion) to 1.5270 (38.2% retracement)

Impact that the U.K. Jobless Claims Change has had on GBP during the last release

Period	Data Released	Estimate	Actual	Pips Change (1 Hour post event )	Pips Change (End of Day post event)
DEC 2014	01/21/2014 9:30 GMT	-25.0K	-29.7K		-136

U.K. Jobless Claims fell more-than-expected as the figure shrank another 29.7K in December, while the ILO Unemployment Rate declined to a 6-year low of 5.8% during the three-months through November. Wage growth outpaced the headline reading for inflation, with Average Weekly Earnings expanding an annualized 1.7% during the same period. Despite the ongoing improvement in the labor market, it seems as though the Bank of England (BoE) will preserve its neutral stance as the central bank curbs its near-term outlook for inflation. Nevertheless, the better-than-expected print failed to spur a meaningful reaction in GBP/USD, with the pair largely advancing during the North American trade to end the day at 1.6480.

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


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- U.K. Retail Sales to Contract for First Time in Four Months.
- Will Lower Energy Prices & Faster Job/Wage Growth Boost Consumption?

Trading the News: U.K. Retail Sales

A contraction in U.K. Retail Sales may spur a near-term pullback in GBP/USD as it dampens the outlook for a stronger recovery in 2015.

What’s Expected:

Why Is This Event Important:

However, we may see private-sector consumption outpace market expectations as the Bank of England (BoE) anticipates lower energy prices to boost disposable incomes, and Governor Mark Carney may continue to prepare U.K. households and businesses for higher borrowing-costs as the central bank head turns increasingly upbeat towards the economy.

Expectations: Bearish Argument/Scenario

Release	Expected	Actual
Consumer Price Index Core (YoY) (JAN)	1.4%	1.4%
Net Consumer Credit (DEC)	1.2B	0.6B
Gross Domestic Product (QoQ) (4Q A)	0.6%	0.5%

The stickiness in core inflation paired with the slowdown in private-sector credit may trigger a marked decline in U.K. Retail Sales, and a dismal data print may spur a near-term pullback in GBP/USD as it drags on interest rate expectations.

Risk: Bullish Argument/Scenario

Release	Expected	Actual
Jobless Claims Change (JAN)	-25.0K	-38.6K
Average Weekly Earnings inc Bonus (3MoY) (DEC)	1.7%	2.1%
GfK Consumer Confidence (JAN)	-2	1

Nevertheless, improved confidence paired with the pickup in job/wage growth may produce a better-than-expected sales report, and a further improvement in household spending may encourage the BoE to raise the benchmark interest rate sooner rather than later as heightens the prospects for a stronger recovery.

How To Trade This Event Risk

Bearish GBP Trade: Private Spending in U.K. Contracts 0.2% or Greater

• Need red, five-minute candle following the release to consider a short British Pound trade
• If market reaction favors short sterling trade, sell GBP/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 GBP Trade: Retail Sales Exceeds Market Forecast

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

Potential Price Targets For The Release
GBP/USD Daily Chart

• Lack of momentum to preserve the bullish trend in RSI may highlight a near-term top in GBP/USD as it fails to push back above the former support region.
• Interim Resistance: 1.5500 pivot to 1.5520 (38.2% expansion)
• Interim Support: 1.5250 (100% expansion) to 1.5270 (38.2% retracement)

Impact that the U.K. Retail Sales report has had on GBP during the last release

Period	Data Released	Estimate	Actual	Pips Change (1 Hour post event )	Pips Change (End of Day post event)
DEC 2014	01/23/2015 9:30 GMT	-0.6%	0.4%	+12	+16

U.K. Retail Sales unexpectedly rose another 0.4% in December following the 1.6% expansion the month prior, which was largely driven by falling energy prices. The low inflation environment paired with the ongoing improvement in the labor market may encourage a stronger recovery in the U.K. as it boosts private-sector consumption, one of the leading drivers of growth. Despite the positive results, the lack of follow-through behind the initial reaction kept GBP/USD within the weekly range, with the pair closing at 1.4978.

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


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- Canada Retail Sales to Contract for First Time Four Months.
- Will a Slowdown in Private Consumption Fuel Bets for More BoC Easing?

Trading the News: Canada Retail Sales

A slowdown in Canada Retail Sales may spur a larger advance in USD/CAD as the Bank of Canada (BoC) adopts a more cautious outlook for the region.

What’s Expected:

Why Is This Event Important:

Following the surprise rate cut at the January 21 meeting, a further deterioration in the growth outlook may prompt BoC Governor Stephen Poloz to relay a more dovish tone for monetary policy and show a greater willingness to further reduce the benchmark interest rate in an effort to generate a stronger recovery.

Expectations: Bearish Argument/Scenario

Release	Expected	Actual
Existing Home Sales (MoM) (JAN)	--	-3.1%
Ivey Purchasing Manager Index s.a. (JAN)	53.4	45.4
Business Outlook Future Sales (4Q)	29.00	8.00

Waning business confidence paired with growing concerns surrounding the housing market may drag on private-sector consumption, and a dismal sales report may drive fresh weekly highs in USD/CAD amid the deviation in the policy outlook.

Risk: Bullish Argument/Scenario

Release	Expected	Actual
Industrial Product Price (MoM) (DEC)	-0.6%	-1.6%
Net Change in Employment (JAN)	5.0K	35.4K
Consumer Price Index (YoY) (DEC)	1.6%	1.5%

Nevertheless, easing inflation along with the ongoing improvement in the labor market may boost household spending, and a better-than-expected print may push USD/CAD back towards the monthly low (1.2350) as it limit’s the BoC’s scope to implement offer lower borrowing-costs.

How To Trade This Event Risk

Bearish CAD Trade: Canada Retail Sales Slip 0.4% or Greater

• Need green, five-minute candle following a dismal sales 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: Private-Sector Consumption Tops Market Forecast

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

Potential Price Targets For The Release
USD/CAD Daily Chart

• Need a break of the near-term bearish momentum in RSI to favor a resumption of the long-term bullish trend.
• Interim Resistance: 1.2797 (February high) to 1.2800 (38.2% expansion)
• Interim Support: 1.2340 (38.2% retracement) to 1.2390 (161.8% expansion)

Impact that the Canada Retail Sales 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	01/23/2015 13:30 GMT	-0.2%	0.4%	-22	-17

Canada’s Retail Sales unexpectedly increased 0.4% in November, led by a 5.2% rise in discretionary spending on clothing and accessories. Indeed, lower energy price may continue to prop up household spending as it boosts disposable incomes, but the sharp decline in oil may present a larger headwind for the overall economy as the Bank of Canada (BoC) defies market expectations and cuts the benchmark interest rates in an effort to promote investment. Nevertheless, the better-than-expected print pushed USD/CAD below the 1.2400 handle, but the pair bounced back during the North America trade to end the session at 1.2422.

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


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- German Unemployment to Contract for Fifth Consecutive Month in February.
- Jobless Rate to Hold at Record-Low of 6.5% for Second Month.

Trading the News: German Unemployment Change

Another 10K contraction in German Unemployment may encourage a near-term rebound in EUR/USD as it raises the prospects for a stronger recovery in the euro-area.

What’s Expected:

Why Is This Event Important:

A further improvement in Europe’s largest economy may limit the European Central Bank’s (ECB) scope to further embark on its easing cycle and heighten the appeal of the single currency especially as the member-states take unprecedented steps to mitigate the risk for contagion.

Expectations: Bullish Argument/Scenario

Release	Expected	Actual
Gross Domestic Product s.a. (QoQ) (4Q P)	0.3%	0.7%
Trade Balance (DEC)	16.0B	19.1B
Factory Orders (MoM) (DEC)	1.5%	4.2%

Greater demand from home and abroad may encourage German firms to further expand their labor force, and a better-than-expected print may spur a bullish reaction in EUR/USD as it raises the outlook for growth and inflation.

Risk: Bearish Argument/Scenario

Release	Expected	Actual
IFO Business Climate (FEB)	107.7	106.8
Markit Purchasing Manager Index Manufacturing (FEB P)	51.5	50.9
Industrial Production s.a. (MoM) (DEC)	0.4%	0.1%

However, waning business confidence paired with the slowdown in production may drag on employment, and a dismal labor report may heighten the bearish sentiment surrounding the Euro as ECB President Mario Draghi keeps the door open to further support the monetary union.

How To Trade This Event Risk

Bullish EUR Trade: Unemployment Contracts 10K or Greater

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

Bearish EUR Trade: German Labor Report Disappoints

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

Potential Price Targets For The Release
EUR/USD Daily Chart

• Long-term outlook remains bearish as the RSI retains the downward trend from 2013, but need a break/close below support to revert back to the approach to ‘sell bounces’ in EUR/USD.
• Interim Resistance: 1.1440 (23.6% retracement) to 1.1480 (78.6% expansion)
• Interim Support: 1.1300 (161.8% expansion) to 1.1310 (100% expansion)

Impact that the GermanyUnemployment Change 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)
JAN 2015	01/29/2015 08:55 GMT	-10.0K	-9.0K	+20	+33

The number of unemployed in Germany contracted 9.0K in January, while the jobless rate narrowed to a record-low of 6.5% from a revised 6.6% the month prior. Despite the ongoing improvement in Europe’s largest economy, the European Central Bank’s (ECB) may continue to highlight a dovish tone for monetary policy as it struggles to achieve its one and only mandate to deliver price stability. Nevertheless, EUR/USD tracked higher following the report, with the pair pushing above the 1.1300 handle to end the day at 1.1326.

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


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- U.S. 4Q GDP to Expand 2.0%- Slowest Pace of Growth Since the Contraction in 1Q 2014.
- Personal Consumption to Grow 4.3% - Fastest Pace of Growt5h Since 1Q 2006.

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

A marked downward revision in the U.S. growth rate may generate a short-term rebound in EUR/USD should the preliminary 4Q Gross Domestic Product (GDP) report dampen bets for a mid-2015 Fed rate hike.

What’s Expected:

Why Is This Event Important:

Despite bets for higher borrowing-costs, further weakness in the core Personal Consumption Expenditure (PCE), the Fed’s preferred gauge for inflation, may push Chair Janet Yellen to endorse a wait-and-see approach and further delay the normalization cycle as the central bank struggles to achieve the 2% target for price growth.

Expectations: Bearish Argument/Scenario

Release	Expected	Actual
Consumer Confidence (FEB)	99.5	96.4
Advance Retail Sales (MoM) (JAN)	-0.4%	-0.8%
NFIB Small Business Optimism (JAN)	101.0	97.9

Waning household and business confidence along with the slowdown in private spending may drag on the growth rate, and a dismal print may spur a bullish reaction in EUR/USD as it limits the Fed’s scope to normalize monetary policy sooner rather than later.

Risk: Bullish Argument/Scenario

Release	Expected	Actual
Non-Farm Payrolls (JAN)	228K	257K
Average Hourly Earnings (YoY) (JAN)	1.9%	2.2%
Personal Income (DEC)	0.2%	0.3%

Nevertheless, the uptick in private wages paired with the ongoing improvement in the labor market may foster a better-than-expected GDP report, and bets for a stronger recovery may heighten the bullish sentiment surrounding the U.S. dollar as the Fed remains on course to remove the zero-interest rate policy (ZIRP) over the near to medium-term.

How To Trade This Event Risk

Bearish USD Trade: Growth Rate Narrows to 2.0% or Lower

• 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: 4Q GDP Report Tops Market Expectations

• 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 Chart

• Break of the triangle/wedge formation favors a continuation of the bearish trend and the approach to ‘sell-bounces’ in EUR/USD.
• Interim Resistance: 1.1440 (23.6% retracement) to 1.1470 (78.6% expansion)
• Interim Support: 1.1185 (23.6% expansion) to 1.1210 (61.8% retracement)

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 P 2014	11/25/2014 13:30 GMT	3.3%	3.9%	+1	+47

The preliminary 3Q U.S. GDP report showed an unexpected upward revision in the growth rate, with the economy expanding an annualized 3.9% amid an initial forecast for a 3.5% clip. Personal Consumption also increased more than initially expected as the figure climbed 2.2% during the same period, while the core Personal Consumption Expenditure (PCE), the Fed’s preferred gauge for inflation, narrowed to an annualized 1.4% from 2.1% in the third-quarter. Despite the improved outlook for growth, the disinflationary environment may push the Fed to retain its highly accommodative policy stance for an extended period of time as it struggles to achieve the 2% target for inflation. The market reaction following the better-than-expected figures was short-lived as EUR/USD climbed back above the 1.2425 region to end the day at 1.2473.


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

More...

- U.S. Advance Retail Sales to Rise for First Time in Three-Months.
- Will Lower Energy Prices Fuel Private-Sector Consumption?

Trading the News: U.S. Advance Retail Sales

A rebound in U.S. Retail Sales may heighten the bullish sentiment surrounding the greenback and spur a further decline in EUR/USD as it fuels speculation for higher borrowing-costs in the world’s largest economy.

What’s Expected:

Why Is This Event Important:

The Fed may stay on course to normalize monetary policy in mid-2015 as the central bank anticipates lower energy prices to boost private-sector consumption – one of the leading drivers of growth – and Chair Janet Yellen may adopt a more hawkish tone at the March 18 meeting as the board remains confident in achieving the 2% target for inflation.

Expectations: Bullish Argument/Scenario

Release	Expected	Actual
Non-Farm Payrolls (FEB)	235K	295K
Gross Domestic Product (Annualized) (QoQ) (4Q P)	2.0%	2.2%
Durable Goods Orders (JAN)	1.6%	2.8%

Greater demand for large-ticket items paired with the ongoing improvement in the labor market may generate a better-than-expected retail sales figure, and a positive development may put increased pressure on the Fed to move away from its zero-interest rate policy (ZIRP) as growth prospects improve.

Risk: Bearish Argument/Scenario

Release	Expected	Actual
Consumer Credit (JAN)	$14.750B	$11.562B
Average Hourly Earnings (YoY) (FEB)	2.2%	2.0%
Personal Income (JAN)	0.4%	0.3%

Nevertheless, subdued wages along with the slowdown in private-sector credit may drag on retail spending, and another unexpected contraction may further delay the Fed’s normalization cycle as the ongoing weakness in household earnings undermines the central bank’s scope to achieve the inflation target.

How To Trade This Event Risk

Bullish USD Trade: U.S. Retail Sales Rebounds 0.3% or Greater

• Need red, five-minute candle following a positive print to consider a short EUR/USD trade.
• If market reaction favors a bullish 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: Household Spending Disappoints

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

Potential Price Targets For The Release
EUR/USD Daily Chart

• Despite the long-term bearish outlook for EUR/USD, will keep a close eye on the Relative Strength Index (RSI) as it approaches key support levels.
• Interim Resistance: 1.1185 (23.6% expansion) to 1.1210 (61.8% retracement)
• Interim Support: 1.0375 (78.6% expansion) to 1.0400 pivot

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)
JAN 2014	02/12/2014 13:30 GMT	-0.4%	-0.8%	+20	+97

January 2014 U.S. Advance Retail Sales
EURUSD M5: 44 pips price movement by USD - Retail Sales news event

U.S. Retail Sales declined another 0.8% in January following a 0.9% contraction the month prior. Despite lower energy costs, discretionary spending at department stores slipped for the second consecutive month, while demand for motor vehicles and parts slid another 0.5% during the same period. Following the worse-than-expected print, the greenback struggled to hold its ground, with EUR/USD climbing above the 1.1400 handle and closed the day at 1.1428.

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

More...

- Canada Employment to Contract for Third Time in Last Six-Months.
- Jobless Rate to Pick-Up From Lowest Level Since 2008.

Trading the News: Canada Net Change in Employment

A 5.0K contraction in Canada Employment paired with an uptick in the jobless may drag on the loonie and produce fresh 2015-highs in USD/CAD as it fuels speculation for a further reduction in the Bank of Canada’s (BoC) benchmark interest rate.

What’s Expected:

Why Is This Event Important:

Even though BoC Governor Stephen Poloz endorses a wait-and-see approach, a dismal labor report may encourage the central bank to adopt a more dovish tone at the April 15 policy meeting in order to encourage a stronger recovery.

Expectations: Bearish Argument/Scenario

Release	Expected	Actual
Housing Starts (FEB)	179.0K	156.3K
Building Permits (MoM) (JAN)	-4.0%	-12.9%
Retail Sales (MoM) (DEC)	-0.8%	-2.3%

The slowdown in private sector consumption paired with the ongoing weakness in the housing market may drag on employment, and a marked contraction in job growth may heighten the bearish sentiment surrounding the Canadian dollar as the BoC remains cautious on the economy.

Risk: Bullish Argument/Scenario

Release	Expected	Actual
Raw Materials Price Index (MoM) (JAN)	-6.3%	-7.7%
Quarterly Gross Domestic Product (Annualized) (4Q)	2.0%	2.4%
Gross Domestic Product (MoM) (DEC)	0.2%	0.3%

Nevertheless, lower input costs accompanied by the pickup in private sector activity may encourage Canadian firms to boost their labor force, and a positive development may keep the USD/CAD range intact as the BoC looks to retain its current policy over the near-term.

How To Trade This Event Risk

Bearish CAD Trade: Canada Sheds 5.0K Jobs or Greater

• Need green, five-minute candle following the report for a potential long USD/CAD trade
• If market reaction favors a bearish loonie trade, buy USD/CAD 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 breakeven on remaining position once initial target is met, set reasonable limit

Bullish CAD Trade: Employment Report Exceeds Market Expectations

• Need red, five-minute candle to consider a short USD/CAD position
• Carry out the same setup as the bearish Canadian dollar trade, just in the opposite direction

Potential Price Targets For The Release
USD/CAD Daily Chart

• Favor the approach to ‘buy-dips’ in USD/CAD following the bullish RSI break, but seems as though the dollar-loonie needs a fundamental catalyst for a break/close above the February high (1.2797)
• Interim Resistance: 1.2797 (Feb. high) to 1.2800 (38.2% expansion)
• Interim Support: 1.2390 (161.8% expansion) to 1.2420 (161.8% expansion)

Impact that Canada Employment Change has had on CAD during the last release

Period	Data Released	Estimate	Actual	Pips Change (1 Hour post event )	Pips Change (End of Day post event)
JAN 2015	02/06/2015 13:30 GMT	5.0K	35.4K	+12	+8

The Canadian economy added 35.4K jobs in the first month of 2015 after contracting a revised 11.3K the month prior. At the same time, the jobless rate fell to an annualized 6.6% from 6.7% the month prior even as the participant rate held steady at 65.7%. Despite the better-than-expected headline print, the pickup in job growth was larger contributed to a 47.2K rise in part-time positions as full-time employment slipped 11.9K in January. Despite the better-than-expected print, the U.S. Non-Farm Payrolls report drove USD/CAD above the 1.2450 region to end the day at 1.2504.

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


More...

- U.K. Jobless Claims to Contract for 28th Consecutive Month in February.
- Wages to Expand an Annualized 2.2%- Fastest Pace of Growth Since June 2013.

Trading the News: U.K. Jobless Claims Change

Another 30.0K decline in U.K. Jobless Claims paired with a hawkish Bank of England (BoE) Minutes may spark a near-term rebound in GBP/USD should the fundamental developments boost interest rate expectations.

What’s Expected:

Why Is This Event Important:

At the same time, Average Weekly Earnings are projected to increase an annualized 2.2% after climbing 2.1% in January, and a marked expansion in household earnings may encourage BoE Governor Mark Carney to normalize monetary policy sooner rather than later as the central bank anticipates a more sustainable recovery in the U.K economy.

Expectations: Bullish Argument/Scenario

Release	Expected	Actual
Markit Purchasing Manager Index (FEB)	53.3	54.1
Producer Price Index- Input n.s.a. (YoY) (JAN)	-11.9%	-14.2%
CBI Business Optimism (JAN)	--	15

Falling input costs paired with the pickup in business confidence may spark a marked expansion in job/wage growth, and a positive development may heighten the appeal of the British Pound as the BoE largely remains on course to normalize monetary policy over the medium-term.

Risk: Bearish Argument/Scenario

Release	Expected	Actual
Construction Output s.a. (MoM) (JAN)	1.3%	-2.6%
Manufacturing Production (MoM) (JAN)	0.2%	-0.5%
Mortgage Approvals (JAN)	61.0K	60.8K

However, the slowdown in building activity along with the pullback in business outputs may drag on hiring, and a dismal labor report may push Governor Carney to further delay the normalization cycle in an effort to encourage a stronger recovery.

How To Trade This Event Risk

Bullish GBP Trade: Claims Slip 30.0K or More Accompanied by Stronger Wages

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

Bullish GBP Trade: Labor Report Fails to Meet Market Expectations

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

Potential Price Targets For The Release
GBP/USD Daily Chart

• The near-term rebound in the RSI may pave the way for a larger rebound in GBP/USD as the oscillator comes off of oversold territory.
• Interim Resistance: 1.5000 pivot to 1.5020 (50% expansion)
• Interim Support: 1.4700 pivot to 1.4710 (78.6% expansion)

Impact that the U.K. Jobless Claims Change has had on GBP during the last release

Period	Data Released	Estimate	Actual	Pips Change (1 Hour post event )	Pips Change (End of Day post event)
JAN 2015	02/18/2015 9:30 GMT	-25.0K	-38.6K	+62	+73

U.K. Jobless Claims decline another 38.6K in January following the revised 35.8K contraction the month prior. The unemployment rate subsequently fell to 5.7% in three-months through November, reaching the lowest level since September 2008. In addition, private wages grew more-than-expected over the last quarter at an annualized rate of 2.1% amid forecasts for a 1.7% print. The ongoing improvement in the U.K. labor market may encourage the Bank of England (BoE) to retain a hawkish tone for monetary policy as the central bank anticipates stronger wage growth in 2015. The sterling gained ground following slew of positive prints, with GBP/USD breaking above the 1.5400 handle to end the day at 1.5444.

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

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Originally Posted by TheNews

- U.K. Jobless Claims to Contract for 28th Consecutive Month in February.
- Wages to Expand an Annualized 2.2%- Fastest Pace of Growth Since June 2013.

Trading the News: U.K. Jobless Claims Change

Another 30.0K decline in U.K. Jobless Claims paired with a hawkish Bank of England (BoE) Minutes may spark a near-term rebound in GBP/USD should the fundamental developments boost interest rate expectations.

What’s Expected:

Why Is This Event Important:

At the same time, Average Weekly Earnings are projected to increase an annualized 2.2% after climbing 2.1% in January, and a marked expansion in household earnings may encourage BoE Governor Mark Carney to normalize monetary policy sooner rather than later as the central bank anticipates a more sustainable recovery in the U.K economy.

Expectations: Bullish Argument/Scenario

Release	Expected	Actual
Markit Purchasing Manager Index (FEB)	53.3	54.1
Producer Price Index- Input n.s.a. (YoY) (JAN)	-11.9%	-14.2%
CBI Business Optimism (JAN)	--	15

Falling input costs paired with the pickup in business confidence may spark a marked expansion in job/wage growth, and a positive development may heighten the appeal of the British Pound as the BoE largely remains on course to normalize monetary policy over the medium-term.

Risk: Bearish Argument/Scenario

Release	Expected	Actual
Construction Output s.a. (MoM) (JAN)	1.3%	-2.6%
Manufacturing Production (MoM) (JAN)	0.2%	-0.5%
Mortgage Approvals (JAN)	61.0K	60.8K

However, the slowdown in building activity along with the pullback in business outputs may drag on hiring, and a dismal labor report may push Governor Carney to further delay the normalization cycle in an effort to encourage a stronger recovery.

How To Trade This Event Risk

Bullish GBP Trade: Claims Slip 30.0K or More Accompanied by Stronger Wages

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

Bullish GBP Trade: Labor Report Fails to Meet Market Expectations

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

Potential Price Targets For The Release
GBP/USD Daily Chart

• The near-term rebound in the RSI may pave the way for a larger rebound in GBP/USD as the oscillator comes off of oversold territory.
• Interim Resistance: 1.5000 pivot to 1.5020 (50% expansion)
• Interim Support: 1.4700 pivot to 1.4710 (78.6% expansion)

Impact that the U.K. Jobless Claims Change has had on GBP during the last release

Period	Data Released	Estimate	Actual	Pips Change (1 Hour post event )	Pips Change (End of Day post event)
JAN 2015	02/18/2015 9:30 GMT	-25.0K	-38.6K	+62	+73

U.K. Jobless Claims decline another 38.6K in January following the revised 35.8K contraction the month prior. The unemployment rate subsequently fell to 5.7% in three-months through November, reaching the lowest level since September 2008. In addition, private wages grew more-than-expected over the last quarter at an annualized rate of 2.1% amid forecasts for a 1.7% print. The ongoing improvement in the U.K. labor market may encourage the Bank of England (BoE) to retain a hawkish tone for monetary policy as the central bank anticipates stronger wage growth in 2015. The sterling gained ground following slew of positive prints, with GBP/USD breaking above the 1.5400 handle to end the day at 1.5444.

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

More...

GBPUSD M5: 93 pips price movement by GBP - Jobless Claims Change news event :