2 Attachment(s)
Post-ECB EUR/USD Rally to Benefit from Dovish Fed Rate-Hike
- Federal Open Market Committee (FOMC) Widely Expected to Remove Zero-Interest Rate Policy (ZIRP).
- Will There Be a Unanimous Vote to Implement Higher Borrowing-Costs?
Trading the News: Federal Open Market Committee (FOMC) Interest Rate Decision
Based on Fed Funds Futures, market participants are pricing a 76% probability for a rate-hike a the Federal Open Market Committee’s (FOMC) December 16 interest rate decision, and the fresh updates coming out of the central bank may instill a bullish U.S. dollar outlook for 2016 should Chair Janet and Co. outline a more detailed exit-strategy.
What’s Expected:
Attachment 17093
Why Is This Event Important:
Even though the FOMC remains on course to shift gears, a split decision to implement higher borrowing-costs accompanied by a downward revision in the central bank’s updated forecasts may drag on rate expectations, and the dollar stands at risk of facing near-term headwinds over the remainder of the month should the ‘data dependent’ Fed highlight a wait-and-see approach for the year ahead.
Expectations: Bullish Argument/Scenario
| Release |
Expected |
Actual |
| Consumer Price Index ex. Food & Energy (YoY) (NOV) |
2.0% |
2.0% |
| Non-Farm Payrolls (NOV) |
200K |
211K |
| ADP Employment Change (NOV) |
190K |
217K |
With the U.S. economy approaching ‘full-employment,’ Fed officials may sound increasingly upbeat and endorse a more hawkish outlook for monetary policy as Chair Yellen remains confident in achieving the 2% inflation target over the policy horizon.
Risk: Bearish Argument/Scenario
| Release |
Expected |
Actual |
| Real Average Weekly Earnings (YoY) (NOV) |
-- |
1.6% |
| Advance Retail Sales (MoM) (NOV) |
0.3% |
0.2% |
| Average Hourly Earnings (YoY) (NOV) |
2.3% |
2.3% |
However, subdued wage growth paired with the ongoing weakness in household consumption may push the FOMC to temper market expectations, and the greenback may struggle to hold its ground should the committee outline a more shallow path for interest rates.
How To Trade This Event Risk
Bullish USD Trade: Fed Lifts Benchmark Interest Rate, Warns of Higher Borrowing-Costs in 2016
- Need red, five-minute candle following the rate decision to consider a short EUR/USD position.
- 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 cost; at least 1:1 risk-to-reward.
- Move stop to entry on remaining position once initial target is met, set reasonable limit.
Bearish USD Trade: FOMC Implements ‘Dovish’ Rate-Hike, Endorses Wait-and-See Approach
- Need green, five-minute candle to favor a long EUR/USD trade.
- Implement same strategy as the bullish dollar trade, just in the opposite direction.
Potential Price Targets For The Release
EURUSD Daily
Attachment 17094
- Despite bets for the first Fed rate-hike in nearly a decade, the near-term rally in EUR/USD following the European Central Bank (ECB) interest rate decision may gather pace in the days ahead especially as the Relative Strength Index (RSI) appears to be breaking out of the bearish formation carried over from back in August.
- Interim Resistance: 1.1052 (November high) to 1.1090 (50% retracement)
- Interim Support: Interim Support: 1.0380 (78.6% expansion) to 1.0410 (61.8% expansion)
Impact that the FOMC 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) |
OCT
2015 |
10/28/2015 18:00 GMT |
0.25% |
0.25% |
-165 |
-144 |
more...
2 Attachment(s)
EUR/USD Risks Larger Recovery on Upbeat Euro-Zone Retail Sales
- Euro-Zone Retail Sales to Expand for First Time Since July.
- Will Signs of a Stronger Recovery Encourage the ECB to Adopt an Improved Outlook?
Trading the News: Euro-Zone Retail Sales
A rebound in Euro-Zone Retail Sales may generate a near-term rebound in EUR/USD as signs of a stronger recovery raises the European Central Bank’s (ECB) scope to retain its current policy throughout 2016.
What’s Expected
Attachment 17591
Why Is This Event Important
After further reducing the deposited-rate and adjusting its quantitative-easing program in December, the Governing Council may largely endorse a wait-and-see approach in the first-half of the year as the non-standard measures continue to work their way through the real economy. Positive developments coming out of the monetary union may encourage the ECB to adopt an improved outlook for the region but, central bank President Mario Draghi may keep the door open to implement additional monetary support in order to achieve the mandate for price stability.
Expectations: Bullish Argument/Scenario
| Release |
Expected |
Actual |
| Consumer Price Index (YoY) (DEC A) |
0.3% |
0.2% |
| Markit Purchasing Manager Index- Composite (DEC F) |
54.0 |
54.3 |
| Employment (QoQ) (3Q) |
-- |
0.3% |
Discounted prices paired with the pickup in private-sector activity may spur a marked rebound in household consumption, and a positive sales report may halt the near-term decline in the single-currency as market participants scale back bets for more ECB easing.
Risk: Bearish Argument/Scenario
| Release |
Expected |
Actual |
| M3 Money Supply (YoY) (DEC) |
5.2% |
5.1% |
| Labour Costs (YoY) (3Q) |
-- |
1.1% |
| Business Climate Indicator (NOV) |
0.45 |
0.36 |
However, waning confidence accompanied the slowdown in private-lending may drag on retail sales, and a dismal development may encourage the ECB to further insulate the region as President Draghi largely retains a dovish outlook for monetary policy.
How To Trade This Event Risk
Bullish EUR Trade: Euro-Zone Retail Sales Climbs 0.2% or Greater
- Need green, five-minute candle following a positive growth report to consider a long EUR/USD trade.
- If market reaction favors a bullish Euro trade, buy EUR/USD with two separate position.
- Set stop at the near-by swing low/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.
Bearish EUR Trade: Private-Sector Spending Continues to Disappoint
- Need red, five-minute candle to favor a short EUR/USD trade.
- Implement same strategy as the bullish euro trade, just in reverse.
Potential Price Targets For The Release
EURUSD Daily
Attachment 17589
- EUR/USD remains at risk of giving back theadvance following the ECB’s December meeting amid the deviating paths for monetary policy but, the pair may consolidate going into the end of the week as market participants gauge the trajectory for U.S. interest rates.
- Interim Resistance: 1.1052 (November high) to 1.1090 (50% retracement)
- Interim Support: Interim Support: 1.0380 (78.6% expansion) to 1.0410 (61.8% expansion)
more...
3 Attachment(s)
Trading News Events: EUR/USD - daily ranging within reversal levels
Trading the News: U.S. Non-Farm Payrolls
Another 200K expansion in Non-Farm Payrolls (NFP) paired with a meaningful pickup in U.S. wage growth may trigger a short-term selloff in EUR/USD as it puts increased pressure on the Federal Open Market Committee (FOMC) to further normalize monetary policy in 2016.
What’s Expected:
Attachment 17627
Why Is This Event Important:
Despite the cautious tone laid out in the Fed Minutes, a further improvement in labor market conditions may encourage the committee to adopt a more hawkish tone at the January 27 interest rate decision as Chair Janet Yellen remains confident in achieving the 2% inflation goal over the policy horizon.
Expectations: Bullish Argument/Scenario
| Release |
Expected |
Actual |
| Challenger Job Cuts (YoY) (DEC) |
-- |
-27.6% |
| ADP Employment (DEC) |
198K |
257K |
| Gross Domestic Product (Annualized) (QoQ) (3Q F) |
1.9% |
2.0% |
However, the slowdown in business outputs along with the persistent weakness in private-sector consumption may drag on job growth, and a dismal NFP print may prompt the FOMC to endorse a wait-and-see approach in an effort to mitigate the downside risk for growth and inflation.
How To Trade This Event Risk
Bullish USD Trade: NFP Climb Another 200K or Greater, Wage Growth Picks Up
- Need red, five-minute candle following the NFP print to consider a short trade on EUR/USD.
- 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: 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
EURUSD Daily
Attachment 17626
- Long-term outlook for EUR/USD remains tilted to the downside amid the deviating paths for monetary policy but, failure to preserve the bearish setup carried over from the previous month may highlight a larger correction in the exchange rate.
- Interim Resistance: 1.1052 (November high) to 1.1090 (50% retracement)
- Interim Support: Interim Support: 1.0380 (78.6% expansion) to 1.0410 (61.8% 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) |
| NOV 2015 |
12/04/2015 13:30 GMT |
200K |
211K |
-1 |
-49 |
November 2015 U.S. Non-Farm Payrolls
EURUSD M5: 60 pips range price movement by Non-Farm Employment Change news event:
Attachment 17628
more...
2 Attachment(s)
GBP/USD Risks Further Losses on Slowing U.K. Job/Wage Growth
Trading the News: U.K. Jobless Claims Change
A 2.8K rise in U.K. Jobless Claims accompanied with another slowdown in wage growth may generate fresh 2016 lows in GBP/USD as it raises the Bank of England’s (BoE) scope to further delay its normalization cycle.
What’s Expected:
Attachment 17967
Why Is This Event Important:
The recent comments from BoE Governor Mark Carney suggests that the Monetary Policy Committee (MPC) is in no rush to lift the benchmark interest rate off of the record-low, and the board may continue to endorse a wait-and-see approach at the next policy meeting on February 4 as the central bank head looks for signs of stronger inflation.
Nevertheless, the pickup in private-sector lending along with the rise in household spending may encourage U.K. firms to expand their labor force, and a positive development may spur a greater dissent within the BoE as central bank officials see a ‘solid’ recovery in the region.
How To Trade This Event Risk
Bearish GBP Trade: Jobless Claims Increase, Household Earnings Slide
- Need red, five-minute candle following the print to consider a short GBP/USD trade.
- If market reaction favors selling sterling, short 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: U.K. Job/Wage Growth Beat Market Expectations
- Need green, five-minute candle to favor a long GBP/USD trade.
- Implement same setup as the bearish British Pound trade, just in reverse.
Potential Price Targets For The Release
GBPUSD Daily
Attachment 17968
- Longer-term outlook for GBP/USD remains tilted to the downside as price & the Relative Strength Index (RSI) retain the bearish formations carried over from the previous year; will continue to watch the downside especially as the oscillator pushes deeper into oversold territory and approaches the lowest level since September 2009.
- Interim Resistance: 1.4860 (78.6% retracement) to 1.4910 (61.8% retracement)
- Interim Support: 1.3870 (78.6% expansion) and 1.4000 pivot
more...
2 Attachment(s)
EUR/USD Stuck in Tight Range Ahead of ECB; Short-Squeeze on Tap?
Trading the News: European Central Bank (ECB) Interest Rate Decision
Despite the ongoing easing cycle in the euro-area, the fresh rhetoric coming out of the European Central Bank (ECB) may spur a similar market reaction to the December interest rate decision as the Governing Council takes a more cautious approach in pushing monetary policy into uncharted territory.
What’s Expected:
Attachment 18001
Why Is This Event Important:
The deviating paths for monetary policy continues to encourage a long-term bearish outlook for EUR/USD especially as the Federal Reserve pledges to implement higher borrowing-costs in 2016 but, the single-currency may face another short squeeze should President Mario Draghi endorse a wait-and-see approach for the first-half of 2016.
Nevertheless, bright signs coming out of the real economy may push the ECB to the sidelines, and the Euro may face a similar reaction to the December rate decision should the central bank scale back its willingness to implement more non-standard measures.
How To Trade This Event Risk
Bearish EUR Trade: ECB Boosts Bets for More Non-Standard Measures
- Need red, five-minute candle following the policy statement to consider a short EUR/USD trade.
- If market reaction favors a bearish Euro trade, sell EUR/USD with two separate position.
- Set stop at the near-by swing high/reasonable distance from cost; need 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 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
EURUSD Daily
Attachment 18002
- Even though the long-term outlook remains tilted to the downside, EUR/USD stands at risk of facing choppy prices ahead of the ECB rate decision as it remains stuck in a narrowing range; single-currency stands at risk for another short-squeeze should the central bank talk down bets for more monetary easing.
- Interim Resistance: 1.1052 (November high) to 1.1090 (50% retracement)
- Interim Support: Interim Support: 1.0380 (78.6% expansion) to 1.0410 (61.8% expansion)
more...
2 Attachment(s)
Sticky Canada CPI to Fuel Larger USD/CAD Correction
Trading the News: Canada Consumer Price Index (CPI)
A pickup in Canada’s Consumer Price Index (CPI) may heighten the appeal of the loonie and fuel a larger pullback in USD/CAD as it encourages the Bank of Canada (BoC) to retain a wait-and-see approach in 2016.
What’s Expected:
Attachment 18034
Why Is This Event Important:
With the BoC largely endorsing a neutral outlook for monetary policy, it seems as though the central bank is approaching the end of its easing cycle, and signs of sticky price growth may prompt Governor Stephen Poloz to adopt a more hawkish tone over the coming months as the risks to the inflation outlook are ‘roughly balanced.’
However, the protracted recovery may push firms may offer discounted prices amid low input costs, and an softer-than-expected inflation report may renew the bearish sentiment surrounding the loonie as market participants look for additional monetary support in Canada.
How To Trade This Event Risk
Bullish CAD Trade: Sticky Inflation Dampens Bets for BoC Rate-Cut in 2016
- Need to see red, five-minute candle following the release to consider a short trade on USD/CAD.
- If market reaction favors a bullish loonie trade, sell USD/CAD 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 CAD Trade: Headline, Core CPI Fall Short of Market Forecast
- Need green, five-minute candle to favor a long USD/CAD trade.
- Implement same setup as the bullish Canadian dollar trade, just in reverse.
Potential Price Targets For The Release
USD/CAD Daily
Attachment 18033
- Long-term outlook remains tilted to the upside USD/CAD amid the broader series of higher highs & lows in the exchange rate, but the sharp pullback in the Relative Strength Index (RSI) may foreshadow a larger correction in the dollar-loonie as the oscillator comes off of overbought territory and fails to preserve the bullish formation from back in November.
- Interim Resistance: 1.4660 (78.6% retracement) to 1.4730 (78.6% expansion)
- Interim Support: 1.3420 (38.2% expansion) to 1.3460 (61.8% retracement)
more...
2 Attachment(s)
EUR/USD Risks Bullish Breakout on Slowing ISM Non-Manufacturing
Trading the News: U.S. ISM Non-Manufacturing
A slowdown in the ISM Non-Manufacturing survey may produce headwinds for the greenback and spur a near-term rally in EUR/USD as fears of a slowing recovery dampens bets for a Fed rate-hike in the first-half of 2016.
What’s Expected:
Attachment 18462
Why Is This Event Important:
Even though the Federal Open Market Committee (FOMC) appears to be on course to implement higher borrowing-costs, mixed data prints coming out of the U.S. may encourage the central bank to endorse a wait-and-see approach at the March 16 interest rate decision as the ongoing slack on the real economy undermines the Fed’s scope to achieve its 2% inflation target over the policy horizon.
Nevertheless, improved confidence accompanied by the pickup in the housing market may generate pickup in private-sector activity, and a stronger-than-expected ISM print may boost the appeal of the greenback as it reinforces Fed expectations for a consumption-driven recovery in 2016.
How To Trade This Event Risk
Bearish USD Trade: ISM Non-Manufacturing Slips to 55.2 or Lower
- Need green, five-minute candle following the ISM print to consider a long EUR/USD trade.
- 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: U.S. Service-Based Activity Unexpectedly Picks Up
- Need red, five-minute candle to favor a short EUR/USD trade.
- Implement same setup as the bearish dollar trade, just in the opposite direction.
Potential Price Targets For The Release
EURUSD Daily
Attachment 18461
- The diverging paths for monetary policy casts a long-term bearish outlook for EUR/USD, but the pair may attempt to break out of the triangle/wedge formation carried over from the previous month should the ISM report push market participants to push out bets for the next Fed rate-hike.
- Interim Resistance: 1.1052 (November high) to 1.1090 (50% retracement)
- Interim Support: Interim Support: 1.0380 (78.6% expansion) to 1.0410 (61.8% expansion)
more...
2 Attachment(s)
GBP/USD Recovery Hinges on BoE Forecast- Bearish Outlook at Risk
Trading the News: Bank of England (BoE) Interest Rate Decision
The Bank of England (BoE) interest rate decision is likely to reveal another 8 to 1 split as the central bank remains in no rush to normalize monetary policy, but the updated forecasts may heighten the appeal of the sterling and fuel a larger recovery in GBP/USD should the central bank highlight a greater risk of overshooting the 2% inflation target over the policy horizon.
What’s Expected:
Attachment 18490
Why Is This Event Important:
Even though Governor Mark Carney largely endorses a wait-and-see approach, an upward revision in the BoE’s economic projections may boost interest rate expectations as central bank officials remain upbeat on the U.K. economy and prepare households/businesses for higher borrowing-costs.
Nevertheless, signs of sticky price growth paired with the pickup in private-sector lending may push the BoE to drop its dovish tone, and the fresh updated coming out of the central bank may spur a larger recovery in the British Pound should the central bank show a greater willingness to implement a rate-hike in 2016.
How To Trade This Event Risk
Bearish GBP Trade: MPC Continues to Endorse Wait-and-See Approach
- Need red, five-minute candle following the rate decision to consider a short GBP/USD trade.
- If market reaction favors selling Cable, short 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.
Bearish GBP Trade: BoE Highlights Greater Risk of Overshooting Long-Term Inflation Target
- Need green, five-minute candle to favor a long GBP/USD trade.
- Implement same setup as the bearish sterling trade, just in reverse.
Potential Price Targets For The Release
GBP/USD Daily
Attachment 18491
- Long-term outlook for GBP/USD remains tilted to the downside as the pair preserves the downward trend from back in August, but the near-term advance in the Relative Strength Index (RSI) may foreshadow a larger correction in the exchange rate as the oscillator threatens the bearish formation carried over from May.
- Interim Resistance: 1.4910 (61.8% retracement) to 1.4930 (38.2% expansion)
- Interim Support: 1.3870 (78.6% expansion) and 1.4000 pivot
more...
