Trading News Events

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

Another uptick in the U.K. Consumer Price Index (CPI) accompanied by stickiness in the core-rate of inflation may generate a near-term rebound in GBP/USD as it puts increased pressure on the Bank of England (BoE) to normalize monetary policy sooner rather than later.

What’s Expected:

Why Is This Event Important:

The BoE looks poised to retain its current policy ahead of the U.K. Referendum in June as the Monetary Policy Committee (MPC) remains unanimous in keeping the benchmark interest rate at the record-low, but signs of stronger price growth may encourage Governor Mark Carney to adopt a more hawkish tone over the coming months as the central bank sees a risk of overshooting the 2% inflation-target over the policy horizon.

Nevertheless, waning confidence paired with fears surrounding the U.K. Referendum may drag on inflation, and signs of easing price growth may produce near-term headwinds for the sterling as market participants push out bets for a BoE rate-hike.

How To Trade This Event Risk
Bullish GBP Trade: Headline & Core Inflation Meet/Beat Market Forecast

• 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.

Bearish GBP Trade: U.K. CPI Report Disappoints

• 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

• GBP/USD may largely preserve the downward trend carried over from 2015 as the BoE lags behind its U.S. counterpart, but the bearish divergence in the Relative Strength Index (RSI) may highlight an inverse head-and-shoulders formation in the exchange rate as Governor Carney continues to argue that the next move will be to normalize monetary policy.
• Interim Resistance: 1.4910 (61.8% retracement) to 1.4930 (38.2% expansion)
• Interim Support: 1.3870 (78.6% expansion) and 1.4000 pivot

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Trading the News: U.K. Retail Sales

The U.K. Retail Sales report may produce headwinds for the British Pound and drag on GBP/USD as signs of a slowing recovery provides the Bank of England (BoE) with greater scope to further delay its normalization cycle.

What’s Expected:

Why Is This Event Important:

Even though BoE argues that the next policy move will be to lift the benchmark interest rate off of the record-low, the Monetary Policy Committee (MPC) may preserve its current policy throughout 2016 in an effort to mitigate the downside risks surrounding the real economy.

Nevertheless, the expansion in private-sector lending paired with the ongoing improvement in labor-market dynamics may boost household spending, and a positive development may generate a near-term rebound in GBP/USD as it puts pressure on Governor Mark Carney and Co. to normalize monetary policy sooner rather than later.

How To Trade This Event Risk
Bearish GBP Trade: Retail Sales Slips 1.0% or Greater

• Need red, five-minute candle following the GDP report to consider a short British Pound trade.
• If market reaction favors bearish sterling trade, 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. Consumption Beats 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

• Longer-term outlook for GBP/USD remains tilted to the downside as the BoE continues to endorse a wait-and-see approach in 2016, and the pair may continue to carve a series of lower highs & lows over the near to medium-term should the Relative Strength Index (RSI) fail to retain the bullish formation carried over from earlier this year.
• Interim Resistance: 1.4910 (61.8% retracement) to 1.4930 (38.2% expansion)
• Interim Support: 1.3870 (78.6% expansion) and 1.4000 pivot

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Trading the News: U.S. Durable Goods Orders

A 3.0% contraction in orders for U.S. Durable Goods may hamper the near-term advance in the greenback and spur a rebound in EUR/USD should the data print undermine Fed expectations for a ‘consumer-led’ recovery in 2016.

What’s Expected:

Why Is This Event Important:

A slowdown in private-sector consumption, one of the leading drivers of growth and inflation, may push the Federal Open Market Committee (FOMC) to further delay the normalization cycle as the weakening outlook for the global economy derails hopes for a stronger recovery.

How To Trade This Event Risk
Bearish USD Trade: Demand for Large-Ticket Items Decline 3.0% 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.

Bullish USD Trade: U.S. Durable Goods Orders Exceed 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
EURUSD Daily

• EUR/USD may have marked a failed run at the 2016 high (1.1375) as the Relative Strength Index (RSI) fails to retain the bullish formation carried over from the previous month, but the pair may continue to consolidate with the broad range from 2015 as market participants continue to mull the timing of the next Fed rate-hike.
• Interim Resistance: 1.1510 (50% retracement) to 1.1520 (61.8% expansion)
• Interim Support: Interim Support: 1.0380 (78.6% expansion) to 1.0410 (61.8% expansion)

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

Even though the Euro-Zone’s Consumer Price Index (CPI) is anticipated to contract an annualized 0.1% in March, a pickup in the core rate of inflation may boost the appeal of the single-currency and spark fresh monthly highs in EUR/USD as it limit’s the European Central Bank’s (ECB) scope to implement additional monetary support.

What’s Expected:

Why Is This Event Important:

Signs of sticky price growth may encourage the ECB to endorse a wait-and-see approach at April 21 interest rate decision, and President Mario Draghi may adopt a less-dovish tone over the coming month as the series of non-standard measures work their way through the real economy.

However, waning confidence accompanied by subdued factor-gate prices may drag on the CPI, and a softer-than-expected reading may generate a near-term pullback in EUR/USD as it fuels bets for a more accommodative policy stance.

How To Trade This Event Risk

Bullish EUR Trade: Core Rate of Inflation Edges Higher

• Need to see green, five-minute candle following the release to consider a long trade on EURUSD.
• If market reaction favors a bearish Euro 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 EUR Trade: Euro-Zone CPI Report Misses Market Expectations

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

Potential Price Targets For The Release
EURUSD Daily

• Even though the diverging paths for monetary policy fosters a long-term bearish outlook for EUR/USD, the may work its way back towards the top of the 2015 range as it breaks out of the descending channel formation from earlier this month.
• Interim Resistance: 1.1510 (50% retracement) to 1.1520 (61.8% expansion)
• Interim Support: Interim Support: 1.0380 (78.6% expansion) to 1.0410 (61.8% expansion)

more...

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

Another 205K expansion in Non-Farm Payrolls (NFP) may heighten the appeal of the greenback and spur a near-term pullback in EUR/USD as it puts increased pressure on the Federal Open Market Committee (FOMC) to further normalize monetary.

What’s Expected:

Why Is This Event Important:

Market participants may pay increased attention to Average Hourly Earnings as the U.S. economy approaches ‘full-employment,’ and the ongoing weakness in private-sector wages may push the committee to further delay the normalization cycle as central bank officials highlight the downward tilt in inflation expectations.

Nevertheless, waning business confidence paired with the rise in planned job-cuts may drag on labor market dynamics, and the dollar may face further losses over the near-term should the NFP report dampen the outlook for growth and inflation.

How To Trade This Event Risk

Bullish USD Trade: NFP Expands 205K+ Accompanied by Sticky Wage Growth

• 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 Labor Report Fails to Meet Market Expectations

• 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

• Despite the divergence paths between the Federal Reserve and the European Central Bank (ECB), EUR/USD stands at risk of a further advance and may revisiting the highs from 2015 as it breaks above the February high (1.1375).
• Interim Resistance: 1.1510 (50% retracement) to 1.1520 (61.8% expansion)
• Interim Support: Interim Support: 1.0380 (78.6% expansion) to 1.0410 (61.8% expansion)

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Trading the News: Canada Ivey Purchasing Manager Index (PMI)

A rebound in Canada’s Ivey Purchasing Manager Index (PMI) may boost the appeal of the loonie and spark a near-term pullback in USD/CAD as highlights an improved outlook for the Canadian economy.

What’s Expected:

Why Is This Event Important:

A meaningful pickup in business spending may prompt BoC Governor Stephen Poloz to adopt a hawkish tone for monetary policy, and the central bank may show a greater willingness to move away from its easing cycle following the ‘insurance’ rate-cuts from 2015.

However, subdued confidence paired with the slowdown in global trade may drag on private-sector activity, and a dismal PMI print may spur a further advance in USD/CAD as it fuels speculation for lower borrowing-costs.

How To Trade This Event Risk

Bullish CAD Trade: Ivey PMI Advances to

• 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 Miss Market Expectations

• 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

• The downward trend from earlier this year may largely unwind in the days ahead amid the failed attempts to close below 1.2930 (61.8% expansion) to 1.2980 (61.8% retracement), while a bullish divergence appears to be taking shape in the Relative Strength Index (RSI).
• Interim Resistance: 1.3560 (100% expansion) to 1.3630 (38.2% retracement)
• Interim Support: 1.2800 (38.2% expansion) to 1.2831 (October low)

more...

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

Another uptick in the U.K. Consumer Price Index (CPI) accompanied by a pickup in the core rate of inflation may boost the appeal of the sterling and spur a larger rebound in GBP/USD as it puts increased pressure on the Bank of England (BoE) to normalize monetary policy sooner rather than later.

What’s Expected:

Why Is This Event Important:

Even though the Monetary Policy Committee (MPC) is widely expected to preserve the record-low interest rate ahead of the U.K. Referendum in June, heightening price pressures may prompt Governor Mark Carney to adopt a more hawkish tone over the coming months as the BoE sees a risk of overshooting the 2% inflation-target over the policy horizon.

Nevertheless, U.K. firms may increase their efforts to draw domestic demand amid the slowdown in private-sector lending accompanied by the weakening outlook for the global economy, and a soft inflation report may spur a near-term selloff in the sterling as market participants push out bets for a BoE rate-hike.How

To Trade This Event Risk
Bullish GBP Trade: Headline & Core Inflation Upticks in March

• 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.

Bearish GBP Trade: U.K. CPI Report Falls Short of 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 reverse.

Potential Price Targets For The Release

• GBP/USD may continue to track sideways as it preserves the March range, but the bullish tilt on the Relative Strength Index (RSI) may foster a larger rebound over the near-term especially as the pair appears to be carving an inverse head-and-shoulders formation.
• 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...

Trading the News: U.S. Consumer Price Index

A pickup in the U.S. Consumer Price Index (CPI) accompanied by stickiness in the core rate of inflation may boost the appeal of the greenback and spark a further decline in EUR/USD as it boosts interest-rate expectations.

What’s Expected:

Why Is This Event Important:

Even though the Federal Open Market Committee (FOMC) appears to be in no rush to implement higher borrowing-costs, stronger price growth may put increased pressure on the central bank to further normalize monetary policy especially as the U.S. economy approaches ‘full-employment.’

Nevertheless, waning confidence along with the slowdown in household spending may drag on price growth, and a softer-than-expected inflation report may weigh on the dollar as it increases the Fed’s scope to further delay its normalization cycle.

How To Trade This Event Risk

Bullish USD Trade: CPI Report Highlights Sticky U.S. Price Growth

• 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: Headline & Core Rate of Inflation Fail to Meet 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
EURUSD Daily

• EUR/USD stands at risk for a larger pullback as the Relative Strength Index (RSI) fails to preserve the bullish formation carried over from February, with the next key downside region of interest coming in around 1.1090 (50% retracement) to 1.1110 (50% retracement).
• Interim Resistance: 1.1510 (50% retracement) to 1.1520 (61.8% expansion)
• Interim Support: Interim Support: 1.0380 (78.6% expansion) to 1.0410 (61.8% expansion)

more...

Trading the News: U.K. Jobless Claims Change

Despite expectations for another 10.0K decline in U.K. Jobless Claims, a slowdown in household earnings may undermine the near-term advance in GBP/USD as it drags on interest-rate expectations.

What’s Expected:

Even though the Bank of England (BoE) remains upbeat on the U.K. economy, signs of weak wage growth may encourage Governor Mark Carney to retain the record-low interest rate throughout 2016 as the central bank struggles to achieve its 2% target for inflation.

Nevertheless, the slowdown in global growth paired with easing outputs may drag on the labor market, and a dismal employment report may drag on the exchange rate as market participants push out bets for a BoE rate-hike.

How To Trade This Event Risk

Bullish GBP Trade: U.K. Job/Wage Growth Beat Market Expectations

• 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.

Bearish GBP Trade: Jobless Claims, Average Hourly Earnings Disappoint

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

Potential Price Targets For The Release
GBPUSD Daily

• Even though GBP/USD largely retains the downward trend carried over from late-August, the bullish divergence in the Relative Strength Index (RSI) may spur a larger correction especially as the pair appears to be carving an inverse head-and-shoulders patter in 2016.
• Interim Resistance: 1.4910 (61.8% retracement) to 1.4930 (38.2% expansion)
• Interim Support: 1.3870 (78.6% expansion) and 1.3960 (50% expansion)

more...

Trading the News: U.K. Retail Sales

Another contraction in U.K. Retail Sales may dampen the appeal of the British Pound and drag on GBP/USD as signs of a slowing recovery provides the Bank of England (BoE) with increased scope to retain the record-low interest rate throughout the near to medium-term.

What’s Expected:

Even though BoE warns that the next policy move will be to normalize monetary policy, the Monetary Policy Committee (MPC) may stick to the sidelines ahead of the U.K. Referendum in June, and the central bank may look to carry its accommodative policy stance into 2017 amid the uncertainty surrounding the economic outlook.

However, sticky wage growth paired with hopes for a stronger recovery may boost private-sector consumption, and a rebound in retail spending may put increased pressure on the BoE to normalize policy sooner rather than later as Governor Mark Carney sees a risk of overshooting the 2% inflation-target over the policy horizon.

How To Trade This Event Risk
Bearish GBP Trade: Retail Sales Falls Another 0.3% or Greater

• Need red, five-minute candle following the GDP report to consider a short British Pound trade.
• If market reaction favors bearish sterling trade, 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: Household Spending Tops 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 reverse.

Potential Price Targets For The Release
GBPUSD Daily

• The bullish formation on the Relative Strength Index (RSI) may highlight a bottoming-process especially as GBP/USD appears to be carving an inverse head-and-shoulders formation from the end of 2015, but the pair may continue to face range-bound prices as the U.K. Referendum clouds the economic outlook for the U.K.
• Interim Resistance: 1.4910 (61.8% retracement) to 1.4930 (38.2% expansion)
• Interim Support: 1.3870 (78.6% expansion) and 1.3960 (50% expansion)

more...