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Trading News Events

This is a discussion on Trading News Events within the General Discussion forums, part of the Trading Forum category; Trading the News: European Central Bank Interest Rate Decision What’s Expected: Time of release: 07/04/2013 11:45 GMT, 7:45 EDT Primary ...

          
   
  1. #21
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    EUR/USD- Trading the European Central Bank (ECB) Rate Decision

    Trading the News: European Central Bank Interest Rate Decision
    What’s Expected:
    Time of release: 07/04/2013 11:45 GMT, 7:45 EDT
    Primary Pair Impact: EURUSD
    Expected: 0.50%
    Previous: 0.50%
    DailyFX Forecast: 0.50%

    Why Is This Event Important:

    The European Central Bank (ECB) interest rate decision may have a limited impact on the Euro as the central bank is widely expected to retain its current policy in July, but the policy statement may drag on the single currency should the Governing Council look to implement more non-standard measures in the second-half of the year. As the region struggles to return to growth, we may see a growing number of ECB officials turn increasingly cautious towards the economy, and President Mario Draghi may sound more dovish this time around as the governments operating under the fixes-exchange become increasingly reliant on monetary support.

    Recent Economic Developments
    The Upside
    Release Expected Actual
    Euro-Zone Consumer Price Index Esimate (YoY) (JUN) 1.6% 1.6%
    Euro-Zone Economic Confidence (JUN) 90.4 91.3
    Euro-Zone Industrial Production s.a. (MoM) (APR) 0.0% 0.4%
    The Downside
    Release Expected Actual
    Euro-Zone Unemployment Rate (MAY) 12.3% 12.1%
    Euro-Zone Employment (QoQ) (1Q) -- -0.5%
    Euro-Zone Retail Sales (APR) -0.2% -0.5%

    The stickiness in price growth along with ongoing improvement in confidence may encourage the ECB to strike an improved outlook for the region, and a more upbeat policy statement may spark a near-term rally in the Euro as market participants scale back bets for additional monetary support. However, record-high unemployment paired with the persistent weakness in private sector consumption may continue to damp the outlook for growth and inflation, and the ECB may adopt a more dovish tone for monetary policy as the region faces a prolonged recession.

    Potential Price Targets For The Rate Decision



    As the EURUSD fails to preserve the range-bound price action carried over from the previous week, the EURUSD may threaten the upward on a more dovish ECB, and the single currency remains poised to face additional headwinds over the near-term as the governments operating under the fixed-exchange rate system become increasingly reliant on monetary support. However, we may see a relief rally take shape should Mr. Draghi strike an improved outlook for the region, and the central bank may stick to the sidelines throughout the remainder of the 2013 as the region is expected to return to growth later this year.

    How To Trade This Event Risk

    Trading the given event risk may not be as clear cut as some of our previous trades as the ECB sticks to its current policy, but the fresh batch of central bank rhetoric may set the stage for a long Euro trade should the Governing Council strike an improved outlook for the euro-area. Therefore, if President Draghi sounds more upbeat and talks down bets for more easing, we will need to see a green, five-minute candle following the statement to establish a long entry on two-lots of EURUSD. Once these conditions are fulfilled, we will set the initial stop at the nearby swing low or a reasonable distance from the entry, and this risk will generate our first target. The second objective will be based on discretion, and we will move the stop on the second lot to cost once the first trade hits its mark in an effort to lock-in our gains.

    On the other hand, the Governing Council may turn increasingly cautious towards the economy as the region struggles to return to growth, and we may see a growing number of ECB officials show a greater willingness to ease policy further in order to pull the region out of recession. As a result, if Mr. Draghi sees scope to introduce more non-standard measures in the second-half of the year, we will implement the same setup for a short euro-dollar trade as the long position laid out above, just in the opposite direction.

    Impact that the European Central Bank Interest Rate Decision has had on EUR during the last meeting

    Period Data Released Estimate Actual Pips Change
    (1 Hour post event )
    Pips Change
    (End of Day post event)
    JUN 2013 06/06/2013 11:45 GMT 0.50% 0.50% +34 +134

    June 2013 European Central Bank Interest Rate Decision



    Indeed, the European Central Bank kept the benchmark interest rate at 0.50% in June as the Governing Council sees the euro-area returning to growth later this year, and it seems as though the central bank will stick to the sidelines for the time being as inflation expectations remain ‘firmly anchored. Indeed, the more upbeat tone struck by President Mario Draghi propped up the Euro, with the EURUSD climbing above the 1.3050 region, and the single currency continued to appreciate throughout the day as the pair closed at 1.3244.
    --- Written by David Song, Currency Analyst

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    EUR/USD- Trading the U.S. Non-Farm Payrolls (NFP) Report

    Trading the News: U.S. Non-Farm Payrolls
    What’s Expected:
    Time of release: 07/05/2013 12:30 GMT, 8:30 EDT
    Primary Pair Impact: EURUSD
    Expected: 165K
    Previous: 175K
    DailyFX Forecast: 160K to 185K

    Why Is This Event Important:

    U.S. Non-Farm Payrolls are projected to increase another 165K in June and the ongoing improvement in the labor market should heighten the appeal of the USD as it dampens the Fed’s scope to retain its highly accommodative policy stance. As the world’s largest economy gets on a more sustainable path, it looks as though tapering the asset-purchase program will be a growing discussion at the Federal Reserve, and the FOMC remains poised to switch gears later this year as the committee anticipates a stronger recovery in the second-half of 2013.

    Recent Economic Developments
    The Upside
    Release Expected Actual
    ADP Employment Change (JUN) 160K 188K
    Durable Goods Orders (MAY) 3.0% 3.6%
    Advance Retail Sales (MAY) 0.4% 0.6%
    The Downside
    Release Expected Actual
    ISM Non-Manufacturing (JUN) 54.0 52.2
    Gross Domestic Product (Annualized) (QoQ) (1Q F) 2.4% 1.8%
    Industrial Production (MAY) 0.2% 0.0%

    As the Fed continues to highlight the resilience in private sector consumption, the persistent strength in household spending may prompt U.S. firms to expand their labor force, and a positive development should spark a near-term rally in the dollar as it raises the outlook for growth. However, the slowdown in service-based activity along with lower rate of production may drag on hiring, and we may see the Fed retain its quantitative easing program throughout 2013 in an effort to encourage a stronger recovery.

    Potential Price Targets For The Release



    Despite the marked selloff following the European Central Bank interest rate decision, we’re seeing the EURUSD preserve the upward trend from earlier this year, but the euro-dollar may continue to give back the rebound from back in April (1.2743) should the Non-Farm Payrolls report present further arguments to taper the Fed’s quantitative easing program. However, a dismal updated on the labor market may dampen the appeal of the reserve currency, and the near-term rebound in the EURUSD may continue to gather pace over the next 24-hours of trading should the data fall short of market expectations.

    How To Trade This Event Risk

    Indeed, forecasts for another 165K rise in Non-Farm Payrolls highlights a bullish outlook for the reserve currency, and the market reaction may pave the way for a long U.S. dollar trade as it increases the scope of seeing the Fed scale back on QE. Therefore, if NFPs top market expectations, we will need a red, five-minute candle following the release to generate a sell entry on two-lots of EURUSD. Once these conditions are fulfilled, we will set the initial stop at the nearby swing high or a reasonable distance from the entry, and this risk will establish our first target. The second objective will be based on discretion, and we will move the stop on the second lot to cost once the first trade hits its mark in order to preserve our profits.

    In contrast, the ongoing slack in the real economy may continue to drag on employment, and a dismal print may dampen the appeal of the greenback as it fuels speculation for additional monetary support. As a result, if the labor data disappoints, we will carry out the same trade setup for a long euro-dollar trade as the short position mentioned above, just in the opposite direction.

    Impact that the U.S. Non-Farm Payrolls report has had on USD during the last month

    Period Data Released Estimate Actual Pips Change
    (1 Hour post event )
    Pips Change
    (End of Day post event)
    MAY 2013 06/07/2013 12:30 GMT 163K 175K -46 -40

    May 2013 U.S. Non-Farm Payrolls



    The U.S. economy added another 175K jobs in May following a revised 149K rise the month prior, while the jobless rate widened to an annualized 7.6% from 7.5% as discouraged workers returned to the labor force. Despite the mixed reaction immediately following the release, we saw the greenback gain ground throughout the North American trade, with the EURUSD ending the day at 1.3211.
    --- Written by David Song, Currency Analyst


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    Trading the Federal Open Market Committee (FOMC) Minutes

    Trading the News: Federal Open Market Committee Minutes
    What’s Expected:
    Time of release: 07/10/2013 18:00 GMT, 14:00 EDT
    Primary Pair Impact: EURUSD
    Expected: --
    Previous: --
    DailyFX Forecast: --

    Why Is This Event Important:

    The Federal Open Market Committee (FOMC) Minutes may heighten the appeal of the U.S. dollar amid the growing discussion at the central bank to taper the quantitative easing program. Indeed, the Fed may lay out a more detailed exit strategy as the committee anticipates a stronger recovery in the second-half of the year, and the central bank may halt its easing cycle ahead of 2014 as the outlook for growth and inflation improves.

    Recent Economic Developments
    The Upside
    Release Expected Actual
    Consumer Credit (MAY) $12.500B $19.615B
    Change in Non-Farm Payrolls (JUN) 165K 195K
    Advance Retail Sales (MAY) 0.4% 0.6%
    The Downside
    Release Expected Actual
    ISM Non-Manufacturing (JUN) 54.0 52.2
    Gross Domestic Product (Annualized) (QoQ) (1Q F) 2.4% 1.8%
    Industrial Production (MAY) 0.2% 0.0%

    The persistent strength in private sector consumption paired with the ongoing improvement in employment may encourage a growing number of Fed officials to adopt a more hawkish tone for monetary policy, and the bullish sentiment surrounding the reserve currency should gather pace over the near to medium-term amid the shift in the policy outlook. However, the committee may retain a cautious tone amid the persistent slack in the real economy, and the fresh batch of central bank rhetoric may drag on the greenback should the Fed show a greater willingness to retain its highly accommodative policy stance throughout 2013.

    Potential Price Targets For The FOMC Minutes



    Although we’re seeing the EURUSD hold above the April low (1.2743), a more upbeat FOMC Minutes may spur a more meaningful run at the 23.6% Fibonacci retracement from the 2009 high to the 2010 low around 1.2640-50, but we will need to keep a close eye on the relative strength index as it comes up against oversold territory. In turn, a more dovish statement may serve as a fundamental catalyst to spur a more meaningful correction in the exchange rate as market participants weigh the outlook for monetary policy.

    How To Trade This Event Risk

    Trading the given event risk may not be as clear cut as some of our previous trades as the FOMC sticks to the sidelines, but a further shift in central bank rhetoric may spark a bullish reaction in the U.S. dollar as Fed appears to be slowly moving away from its easing program. Therefore, if the committee sounds more upbeat on the economy and drops its dovish tone for monetary policy, we will need to see a red, five-minute candle following the statement to generate a sell entry on two-lots of EURUSD. Once these conditions are met, we will set the initial stop at the nearby swing high or a reasonable distance from the entry, and this risk will establish our first target. The second objective will be based on discretion, and we will move the stop on the second lot to cost once the first trade hits its mark in an effort to lock-in our gains.

    On the other hand, the Fed may preserve a cautious outlook for the region amid the ongoing slack in the real economy, and the central bank may strike a more neutral tone for monetary policy in an effort to promote a stronger recovery. As a result, if the FOMC shows a greater willingness to retain its highly accommodative policy stance, we will implement the same strategy for a long euro-dollar trade as the short position laid out above, just in the opposite direction.

    Impact that the FOMC Interest Rate Decision has had on USD during the last release

    Period Data Released Estimate Actual Pips Change
    (1 Hour post event )
    Pips Change
    (End of Day post event)
    MAY 2013 05/22/2013 18:00 GMT -- -- -17 +1

    May 2013 Federal Open Market Committee Minutes



    Although the FOMC retained its current policy in May, the committee argued that more progress ‘would be required before slowing the pace of purchases would become appropriate,’ but we may see the central bank lay out a more detailed exit strategy in the coming months as the economic recovery gradually gathers pace. Despite the initial decline in the EURUSD, the dollar struggled to hold its ground into the close as the pair ended the day at 1.2856.

    --- Written by David Song, Currency Analyst



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    AUD/USD- Trading the Australian Employment Report

    Trading the News: Australia Employment Change
    What’s Expected:
    Time of release: 07/11/2013 1:30 GMT, 21:30 EDT
    Primary Pair Impact: AUDUSD
    Expected: 0.0K
    Previous: 1.1K
    DailyFX Forecast: -5.0K to 1.0K

    Why Is This Event Important:

    After adding 1.1K jobs in May, Australia employment is expected to hold flat in June, and a dismal development may drag on the AUDUSD as it fuels speculation for additional monetary support. As the Reserve Bank of Australia (RBA) keeps the door open to push the benchmark interest rate to a fresh record-low, the slowing recovery in the $1T economy may prompt the central bank to further embark on its easing cycle, and we may see the Australian dollar face additional headwinds over the near to medium-term as China – Australia’s largest trading partner – remains at risk for a hard-landing.

    Recent Economic Developments
    The Upside
    Release Expected Actual
    NAB Business Confidence (JUN) --
    Trade Balance (MAY) 53M 670M
    Private Sector Credit (YoY) (MAY) 2.9% 3.0%
    The Downside
    Release Expected Actual
    Building Approvals (MoM) (MAY) -1.0% -1.1%
    ANZ Job Advertisements (MoM) (JUN) -- -1.8%
    Retail Sales s.a. (MoM) (MAY) 0.3% 0.1%

    The recent pickup in global trade along with the rebound in business sentiment may lead to a marked improvement in the labor market, and a positive print may heighten the appeal of the higher-yielding currency as it dampens the RBA’s scope to deliver another rate cut. However, the ongoing slack in the real economy along withthe slowdown in private consumption may continue to drag on employment, and RBA Governor Glenn Stevens may show a greater willingness to further embark on the easing cycle in the second-half of the year in order to encourage a stronger recovery.

    Potential Price Targets For The Release



    The Australian dollar looks poised for a larger correction amid the bullish divergence in the relative strength index, and a positive print may serve as the fundamental catalyst to spur a move back above the 61.8% Fibonacci retracement from the 2010 low to high around 0.9210-20 should the data sap bets for additional monetary support. However, a dismal print may generate a more meaningful run at the 0.9000 figure, and we may see the Australian dollar face additional headwinds over the near to medium-term as the RBA looks poised to further embark on its easing cycle.

    How To Trade This Event Risk

    Trading the given event risk may not be as clear cut as some of our previous trades amid forecasts for a flat print, but a positive development may pave the way for a long Australian dollar trade as it drags on expectations for lower borrowing. Therefore, if employment exceeds market expectations, we will need a green, five-minute candle following the release to generate a long trade on two-lots of AUDUSD. Once these conditions are fulfilled, we will set the initial stop at the nearby swing low or a reasonable distance from the entry, and this risk will establish our first objective. The second target will be based on discretion, and we will move the stop on the second lot to breakeven once the first trade hits its mark in an effort to preserve our profits.

    In contrast, the persistent slack in private sector activity may drag on hiring, and a dismal jobs report should dampen the appeal of the higher-yielding as it fuels bets for another rate cut. As a result, if Australia employment disappoints, we will carry out the same setup for a short aussie-dollar trade as the long position laid out above, just in reverse.

    Impact that the change in Australia Employment has had on AUD during the last month

    Period Data Released Estimate Actual Pips Change
    (1 Hour post event )
    Pips Change
    (End of Day post event)
    MAY 2013 06/13/2013 1:30 GMT -10.0K 1.1K +20 +205

    May 2013 Australia Employment Change



    The Australian economy added another 1.1K jobs in May following the revised 45.0K expansion the month prior, while the jobless rate unexpectedly narrowed to 5.5% from 5.6% as discouraged workers left the labor force. Indeed, the second consecutive rise in employment propped up the Australian dollar, with the AUDUSD moving above the 0.9500 figure, and the higher-yielding currency continued to gain ground throughout the day as the pair closed at 0.9638.
    --- Written by David Song, Currency Analyst

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    EUR/USD- Trading the U. of Michigan Confidence Survey

    Trading the News: U. of Michigan Confidence

    What’s Expected:
    Time of release: 07/12/2013 13:55 GMT, 9:55 EDT
    Primary Pair Impact: EURUSD
    Expected: 84.7
    Previous: 84.1
    DailyFX Forecast: 82.0 to 86.0

    Why Is This Event Important:

    The U. of Michigan Confidence survey is expected to increase to 84.7 from 84.1 in June, and the rebound in household sentiment may foster a bullish reaction in the U.S. dollar as it raises the outlook for growth. Although Fed Chairman Ben Bernanke endorsed a highly accommodative policy stance for the world’s largest economy, we should see a growing discussion to taper the asset-purchase program as the recovery gradually gathers pace, and the central bank remains poised to switch gears later this year as the region gets on a more sustainable path.

    Recent Economic Developments
    The Upside
    Release Expected Actual
    Change in Non-Farm Payrolls (JUN) 166K 195K
    Average Hourly Earnings (YoY) (JUN) 1.9% 2.2%
    Personal Income (MAY) 0.2% 0.5%
    The Downside
    Release Expected Actual
    ISM Non-Manufacturing (JUN) 54.0 52.2
    Gross Domestic Product (Annualized) (QoQ) (1Q F) 2.4% 1.8%
    Consumer Price Index (YoY) (MAY) 1.4% 1.4%

    The ongoing improvement in the labor market along with the pickup in wage growth may help to produce a strong confidence report, and a positive development should heighten the appeal of the USD as it raises the Fed’s scope to scale back on quantitative easing. However, the persistent slack in the real economy paired with stronger price growth may drag on household sentiment, and a dismal print may encourage the Fed to retain its highly accommodative policy stance throughout the summer in order to promote a stronger recovery.

    Potential Price Targets For The Release


    As the relative strength index snaps back from overbought territory, the EURUSD looks poised for a larger correction, but an upbeat U. of Michigan Confidence survey may produce a move back towards the 23.6% Fibonacci retracement around 1.2970 should the data raise the Fed’s scope to scale back on QE. However, a dismal print may trigger a more meaning run at the 50.0% retracement (1.3220-30) as it raises the likelihood of seeing the FOMC retain its highly accommodative policy stance throughout the summer months.

    How To Trade This Event Risk

    Forecasts for an uptick in the U. of Michigan confidence survey highlights a bullish outlook for the greenback, and a positive print may pave the way for a long U.S. dollar trade as it raises the outlook for growth. Therefore, if the report tops market expectations, we will need to see a red, five-minute candle following the release to generate a sell entry on two-lots of EURUSD. Once these conditions are met, we will set the initial stop at the nearby swing high or a reasonable distance from the entry, and this risk will generate our first target. The second objective will be based on discretion, and we will move the stop on the second lot to cost once the first trade hits its mark in order to protect our gains.

    However, stronger inflation along with the ongoing slack in the real economy may drag on household sentiment, and a dismal confidence report may produce a bearish reaction in the greenback as it dampens the Fed’s scope to taper its asset-purchase program. As a result, if the figure fall back from 84.1, we will implement the same strategy for a long euro-dollar trade as the short position laid out above, just in the opposite direction.

    Impact that the U. of Michigan Confidence survey has had on USD during the last month
    Period Data Released Estimate Actual Pips Change
    (1 Hour post event )
    Pips Change
    (End of Day post event)
    JUN P 2013 06/14/2013 13:55 GMT 84.5 82.7 +22 +25

    June 2013 U. of Michigan Confidence



    The gauge for U.S. consumer sentiment narrowed to 82.7 in June from 84.5 the month prior, while inflation expectations for the next 12-months climbed to an annualized 3.2% to mark the highest reading since March. Indeed, the decline in consumer sentiment dragged on the dollar, with the EURUSD climbing above the 1.3325 region, and the greenback struggled to hold its ground throughout the North American trade as the pair closed at 1.3341.

    --- Written by David Song, Currency Analyst

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    GBP/USD- Trading the U.K. Consumer Price Report

    Trading the News: U.K. Consumer Price Index
    What’s Expected:
    Time of release: 07/16/2013 8:30 GMT, 4:30 EDT
    Primary Pair Impact: GBPUSD
    Expected: 3.0%
    Previous: 2.7%
    DailyFX Forecast: 2.9% to 3.2%

    Why Is This Event Important:

    The headline reading for U.K. inflation is expected to increase an annualized 3.0% in June, which would mark the fastest pace of growth since April 2012, and the uptick in price growth may prop up the British Pound as it dampens the Bank of England’s (BoE) scope to expand the balance sheet further. Indeed, it seems as though the majority of the Monetary Policy Committee is slowly moving away from the easing cycle as they see a slow but sustainable recovery in Britain, and we may see the central bank continue to operate under its inflation-targeting framework as price growth is expected to hold above the 2% target over the policy horizon.

    Recent Economic Developments
    The Upside
    Release Expected Actual
    Retail Salees ex Auto Fuel (MoM) (MAY) 1.0% 2.1%
    Jobless Claims Change (MAY) -5.0K -8.6K
    Average Weekly Earnings (3MoY) (APR) 0.2% 1.3%
    The Downside
    Release Expected Actual
    Manufacturing Production (MoM) (MAY) 0.4% -0.8%
    Producer Price Index – Input n.s.a. (YoY) (MAY) 2.5% 2.2%
    Producer Price Index – Output n.s.a. (YoY) (MAY) 1.4% 1.2%

    The pickup in private sector consumption along with the improvement in the labor market may push U.K. firms to hike consumer prices, and heightening price pressures may push the BoE to adopt a more hawkish tone for monetary policy as price growth has held above target since December 2009. However, easing input costs paired with the slowdown in business outputs may drag on inflation, and a soft CPI print may renew bets for more quantitative easing as Governor Mark Carney looks to encourage a stronger recovery.

    Potential Price Targets For The Release



    As the GBPUSD finds key support around the 61.8% Fibonacci retracement from the 2009 low to high around 1.4850, a strong CPI print may spark a more meaningful run at the 50.0% retracement (1.5270), and the sterling may continue to retrace the decline from earlier this year should the data dampen speculation for additional monetary support. However, a weaker-than-expected inflation report may push the sterling back to support, and we may see the BoE take additional steps to shore up the ailing economy in an effort to instill a stronger recovery.

    How To Trade This Event Risk

    Forecasts for a faster rate of inflation instills a bullish outlook for the sterling, and a positive development may pave the way for a long British Pound trade as it dampens the scope for more QE. Therefore, if price growth expands an annualized 3.0% or greater in June, we will need to see a green, five-minute candle following the release to establish a long entry on two-lots of GBPUSD. Once these conditions are fulfilled, we will set the initial stop at the nearby swing low or a reasonable distance from the entry, and this risk will generate our first objective. The second target will be based on discretion, and we will move the stop on the second lot to breakeven once the first trade hits its mark in order to preserve our profits.

    On the other hand, the easing input costs along with the persistent slack in the real economy may drag on inflation, and a weak CPI print may spark a sharp selloff ahead of the BoE Minutes as it renews bets for further monetary support. As a result, if the headline reading for inflation falls short of market expectations, we will carry out the same strategy for a short pound-dollar trade as the long position laid out above, just in the opposite direction.

    Impact that the U.K. Consumer Price report has had on GBP during the last month
    Period Data Released Estimate Actual Pips Change
    (1 Hour post event )
    Pips Change
    (End of Day post event)
    MAY 2013 06/18/2013 8:30 GMT 2.6% 2.7% -34 -47

    May 2013 U.K. Consumer Price Index



    U.K. consumer prices increased an annualized 2.7% in May after expanding 2.4% the month prior, while the core rate of inflation climbed 2.2% amid forecasts for a 2.1% print. Despite the higher-than-expected print, the British Pound struggled to hold its ground, with the GBPUSD slipping back below the 1.5675 region, and the sterling weakened further throughout the day as the pair closed at 1.5642.

    --- Written by David Song, Currency Analyst


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    USD/CAD- Trading the Bank of Canada (BoC) Rate Decision

    Trading the News: Bank of Canada Interest Rate Decision
    What’s Expected:
    Time of release: 07/17/2013 14:00 GMT, 10:00 EDT
    Primary Pair Impact: USDCAD
    Expected: 1.00%
    Previous: 1.00%
    DailyFX Forecast: 1.00%

    Why Is This Event Important:

    Although the Bank of Canada (BoC) is widely expected to keep the benchmark interest rate at 1.00% in July, the fresh batch of central bank rhetoric accompanying the rate decision may drag on the Canadian dollar should Governor Stephen Poloz strike a more dovish tone for monetary policy. Indeed, the new central bank head may look to further support the real economy amid the slowing recovery, and we may see the BoC retain its wait-and-see approach for an extended period of time in an effort to encourage an improved outlook for growth and inflation.

    Recent Economic Developments
    The Upside
    Release Expected Actual
    Housing Starts (JUN) 187.5K 199.6K
    Building Permits (MoM) (MAY) -5.2% 4.5%
    Quarterly Gross Domestic Product (Annualized) (1Q) 2.3% 2.5%
    The Downside
    Release Expected Actual
    Business Outlook Future Sales (2Q) 30.00 9.00
    Ivey Purchasing Manager Index s.a. (JUN) 58.3 55.3
    Retail Sales (APR) 0.2% 0.1%

    The BoC may show a greater willingness to deliver a rate hike later this year amid the persistent strength in the housing market, and a more hawkish policy statement may spark a bullish reaction in the Canadian dollar as market participants weigh the outlook for monetary policy. However, Governor Poloz may sound a bit more cautious on the economy amid the slowdown in private sector consumption, and we may see the BoC preserve a neutral policy stance throughout 2013 in an effort to encourage a stronger recovery.

    Potential Price Targets For The Rate Decision


    As the USDCAD breaks out of the consolidation phase dating back to 2011, the upward trending channel from earlier this year should continue to take shape, and we may see the pair carve out a higher low in July should the BoC talk down bets for a rate hike. However, Governor Poloz may keep the door open to introduce a rate hike in order to curb rising home prices, and we may see a more meaningful correction in the exchange rate should the central bank show a greater willingness to normalize monetary policy further.

    How To Trade This Event Risk

    As the BoC retains its current policy stance, we will be closely watching the statement accompanying the rate decision, and the fresh batch of central bank rhetoric may set the stage for a long Canadian dollar trade amid speculation for higher borrowing costs. Therefore, if Governor Poloz shows a greater willingness to raise the benchmark interest rate from 1.00%, we will need a red, five-minute candle following the announcement to establish a sell entry on two-lots of USDCAD. Once these conditions are fulfilled, we will set the initial stop at the nearby swing high or a reasonable distance from the entry, and this risk will generate our first objective. The second target will be based on discretion, and we will move the stop on the second lot to breakeven once the first trade hits its mark in an effort to lock-in our gains.

    On the other hand, the slowdown in household spending paired with the persistent slack in private sector activity may lead the BoC to carry a wait-and-see approach into the end of the year, and we may see the new central bank head strike a more dovish as the fundamental outlook for the region deteriorates. As a result, if Mr. Poloz see limited scope for a rate hike, we will carry out the same setup for a long dollar-loonie trade as the short position mentioned above, just in reverse.

    Impact that the Bank of Canada Interest Rate Decision has had on CAD during the last meeting

    Period Data Released Estimate Actual Pips Change
    (1 Hour post event )
    Pips Change
    (End of Day post event)
    MAY 2013 05/29/2013 14:00 GMT 1.00% 1.00% +19 -26

    May 2013 Bank of Canada Interest Rate Decision



    Indeed, the Bank of Canada held the benchmark interest rate at 1.00% as Governor Mark Carney departs from the central bank, but kept the door open for higher borrowing costs as the outlook for growth and inflation improves. Despite the limited reaction immediately following the rate announced, the Canadian dollar firmed up during the North American trade, with the USDCAD ending the day at 1.0347.

    --- Written by David Song, Currency Analyst

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    GBP/USD- Trading the U.K. Retail Sales Report

    Trading the News: U.K. Retail Sales
    What’s Expected:
    Time of release: 07/18/2013 8:30 GMT, 4:30 EDT
    Primary Pair Impact: GBPUSD
    Expected: 0.2%
    Previous: 2.1%
    DailyFX Forecast: 0.0% to 0.6%

    Why Is This Event Important:

    U.K. Retail Sales are projected to increase another 0.2% in June and the ongoing improvement in private sector consumption should help to produce a more meaningful rebound in the British Pound as it dampens the Bank of England’s (BoE) scope to further embark on its easing cycle. As the BoE now votes unanimously to retain its current policy, it seems as though the central bank is slowly moving away from its easing cycle, and we may see the Monetary Policy Committee start to lay out a more detailed exit strategy over the coming months as the outlook for growth and inflation improves.

    Recent Economic Developments
    The Upside
    Release Expected Actual
    Jobless Claims Change (JUN) -8.0K -21.2K
    Average Weekly Earnings inc Bonus (MAY) 1.4% 1.7%
    Net Consumer Credit (MAY) 0.6B 0.7B
    The Downside
    Release Expected Actual
    Consumer Price Index Core (YoY) (JUN) 2.3% 2.3%
    Producer Price Index- Output n.s.a. (YoY) (JUN) 1.9% 2.0%
    GfK Consumer Confidence Survey (JUN) -21 -21

    The ongoing improvement in the labor market paired with the uptick in wage growth may encourage U.K. households to increase their rate of consumption, and a positive print may further the case for the BoE to keep its asset-purchase program capped at GBP 375B as they see a slow but sustainable recovery in Britain. However, sticky inflation along with the weakness in consumer confidence may drag on retail sales, and a dismal print may dampen the appeal of the sterling as the central bank looks to implement a ‘mixed strategy’ in addressing the risks surrounding the region.

    Potential Price Targets For The Release


    Although the GBPUSD struggled to clear the 50.0% Fibonacci retracement from the 2009 range (1.5270) following the BoE Minutes, we may see a topside break on a positive retail sales report, and the rebound from 1.4812 may gather pace in the days ahead as it builds a short-term base in July. However, we may see the British Pound consolidate over the remainder of the week should the data fuel speculation for more quantitative easing, and the sterling may face range-bound prices over the near-term as market participants weigh the outlook for monetary policy.

    How To Trade This Event Risk

    Forecasts for another uptick in household spending certainly instills a bullish outlook for the sterling, and a positive development may set the stage for a long British Pound trade as it raises the scope for a stronger recovery. Therefore, if retail sales increases 0.2% or greater in June, we will need a green, five-minute candle following the release to generate a buy entry on two-lots of GBPUSD. Once these conditions are met, we will set the initial stop at the nearby swing low or a reasonable distance from the entry, and this risk will establish our first objective. The second target will be based on discretion, and we will move the stop on the second-lot to cost once the first trade hits its mark in order to preserve our profits.

    In contrast, the persistent slack in the real economy along with sticky price growth may drag on consumption, and a dismal print may dampen the appeal of the sterling as the BoE holds a relatively cautious tone for the U.K. economy. As a result, if the sales report disappoints, we will carry out the same setup for a short pound-dollar trade as the short position laid out above, just in the opposite direction.

    Impact that the U.K. Retail Sales report has had on GBP during the last month
    Period Data Released Estimate Actual Pips Change
    (1 Hour post event )
    Pips Change
    (End of Day post event)
    MAY 2013 06/20/2013 8:30 GMT 1.0% 2.1% +41 +77

    May 2013 U.K. Retail Sales



    Household spending in the U.K. jumped 2.1% during June after contracting a revised 1.2% the month prior, led by a 4.3% rise in online sales, with gasoline receipts climbed 1.7% during the same period. Indeed, the better-than-expected print propped up the British Pound, with the GBPUSD climbing above the 1.5475 region, and the sterling continued to gain ground throughout the day as the pair closed at 1.5506.
    --- Written by David Song, Currency Analyst


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    USD/CAD- Trading the Canada Consumer Price Report

    Trading the News: Canada Consumer Price Index
    What’s Expected:
    Time of release: 07/19/2012 12:30 GMT, 8:30 EDT
    Primary Pair Impact: USDCAD
    Expected: 1.2%
    Previous: 0.7%
    DailyFX Forecast: 1.0% to 1.2%

    Why Is This Event Important:

    The headline reading for Canadian inflation is expected to increase an annualized 1.2% in May, and the pickup in price growth may heighten the appeal of the loonie should the data renew bets for higher borrowing costs. Although we’re seeing the Bank of Canada (BoC) retain a cautious outlook for the region, a faster rate of inflation may encourage Governor Stephen Poloz to adopt a more hawkish tone over the coming months, and the central bank may normalize policy further over the medium-term as the economy.

    Recent Economic Developments
    The Upside
    Release Expected Actual
    Net Change in Employment (JUN) -7.5K -0.4K
    International Merchandise Trade (MAY) -0.70B -0.30B
    Quarterly Gross Domestic Product (Annualized) (1Q) 2.3% 2.5%
    The Downside
    Release Expected Actual
    Business Outlook Future Sales (2Q) 30.00 9.00
    Raw Materials Price Index (MoM) (MAY) 0.4% 0.2%
    Retail Sales (APR) 0.2% 0.1%

    Firms in Canada may look to raise consumer prices amid the underlying strength in job growth along with the expansion in private sector credit, and a positive development may heighten the appeal of the Canadian dollar should the data spark bets for a rate hike. However, the slowdown in private sector consumption paired with easing input costs may drag on price growth, and a weak inflation print may keep the BoC on the sidelines for an extended period of time as the central bank aims to encourage a stronger recovery.

    Potential Price Targets For The Release



    As the USDCAD breaks out of the consolidation phase dating back to 2011, we should see the upward trending channel continue to take shape over the near to medium-term, but we may see a move back towards trendline support should Canada’s CPI report renew bets for a BoC rate hike. However, we will look to buy dips in the USDCAD as the bullish trend takes shape, and we may see another run at the 1.0600 handle amid the deviation in the policy outlook.

    How To Trade This Event Risk

    Forecasts for a faster rate of inflation highlights a bullish outlook for the loonie, and the market reaction may set the stage for a long Canadian dollar trade as it fuels bets for a rate hike. Therefore, if consumer prices increase 1.2% or greater in June, we will need a red, five-minute candle following the release to establish a sell entry on two-lots of USDCAD. Once these conditions are fulfilled, we will place the initial stop at the nearby swing high or a reasonable distance from the entry, and this risk will generate our first target. The second objective will be based on discretion, and we will move the stop on the second lot to cost once the first trade hits its mark in order to lock-in our profits.
    However, the slowing recovery may continue to drag on price growth, and a dismal print may prompt a bearish reaction in the Canadian dollar as market participants scale back bets for higher borrowing costs. As a result, if the CPI disappoints, we will implement the same setup for a long dollar-loonie trade as the short position mentioned above, just in reverse.

    Impact that the Canada Consumer Price report has had on CAD during the last month

    Period Data Released Estimate Actual Pips Change
    (1 Hour post event )
    Pips Change
    (End of Day post event)
    MAY 2013 06/21/2013 12:30 GMT 0.9% 0.7% +72 +60

    May 2013 Canada Consumer Price Index



    Consumer prices in Canada increased an annualized 0.7% during the month of May after expanding 0.4% the month prior, while the core rate of inflation held steady an 1.1% amid forecasts for a 1.2% print. Indeed, the weaker-than-expected release dragged on the Canadian dollar, with the USDCAD climbing above the 1.0475 region, but we saw the loonie consolidate during the North American trade as the pair ended the day at 1.0455.

    --- Written by David Song, Currency Analyst


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    NZDUSD- Trading the Reserve Bank of New Zealand (RBNZ) Meeting

    Trading the News: Reserve Bank of New Zealand Interest Rate Decision
    What’s Expected:
    Time of release: 07/24/2013 21:00 GMT, 17:00 EDT
    Primary Pair Impact: NZDUSD
    Expected: 2.50%
    Previous: 2.50%
    DailyFX Forecast: 2.50%

    Why Is This Event Important:

    Although the Reserve Bank of New Zealand (RBNZ) is widely anticipated to keep the benchmark interest rate at 2.50% in July, the fresh batch of central bank rhetoric may heighten the appeal of the New Zealand dollar should Governor Graeme Wheeler layout a more hawkish tone for monetary policy. Indeed, the central bank head may highlight a greater risk for an asset bubble as the rebuilding effort from the Christchurch earthquake boosts economic activity, and the RBNZ may show a greater willingness to start normalizing monetary policy as households and businesses continue to take advantage of record-low borrowing costs.

    Recent Economic Developments
    The Upside
    Release Expected Actual
    Credit Card Spending (MoM) (JUN) -- 2.6%
    QV House Prices (YoY) (JUN) -- 7.6%
    Card Spending- Retail (MoM) (JUN) 0.6% 1.1%
    The Downside
    Release Expected Actual
    Consumer Price Index (YoY) (2Q) 0.8% 0.7%
    Gross Domestic Product s.a. (QoQ) (1Q) 0.5% 0.3%
    Manufacturing Activity Volume (QoQ) (1Q) -- -0.6%

    Indeed, rising home prices along with the ongoing expansion in private sector credit may heighten the risk for a housing bubble, and Governor Wheeler may see scope to lift the benchmark interest rate off the record-low in order to balance the risks surrounding the region. However, the RBNZ may continue to endorse its accommodative policy stance amid the ongoing slack in the real economy, and the central bank may reiterate its pledge to keep borrowing costs on hold throughout the remainder of the year in an effort to encourage a stronger recovery.

    Potential Price Targets For The Rate Decision



    Despite the bullish divergence in the relative strength index, we’re seeing a fairly muted rebound in the NZDUSD as it struggles to hold above the 0.8000 handle, but the fresh batch of central bank rhetoric may serve as the fundamental catalyst to spark short-term rally in the New Zealand dollar should the RBNZ continue to drop its dovish tone for monetary policy. In turn, we may see a move back above the 50.0% Fibonacci retracement of the 2011 range around 0.7970-80, and the New Zealand dollar may outperform against its major counterparts should we see growing speculation for a rate hike.

    How To Trade This Event Risk

    Trading the given event risk may not be as clear cut as some of our previous as the RBNZ is widely expected to retain its current policy, but the statement accompanying the rate decision may instill a bullish outlook for the New Zealand dollar should the central bank sound more hawkish this time around. Therefore, if Governor Wheeler shows a greater willingness to lift the cash rate off the record-low, we will need a green, five-minute candle following the announcement to establish a long entry on two-lots of NZDUSD. Once these conditions are fulfilled, we will set the initial stop at the nearby swing low or a reasonable distance from the entry, and this risk will generate our first objective. The second target will be based on discretion, and we will move the stop on the second lot to breakeven once the first trade hits its mark in order to lock-in our gains.

    In contrast, the persistent slack in the real economy may encourage the RBNZ to strike a more balanced tone for monetary policy, and we may see market participants scale back bets for higher borrowing costs should the central bank reiterate its pledge to keep the benchmark interest rate on hold throughout 2013. As a result, if Mr. Wheeler sounds more dovish this time around, we will implement the same strategy for a short kiwi-dollar trade as the long position laid out above, just in the opposite direction.

    Impact that the RBNZ Interest Rate Decision has had on NZD during the last meeting

    Period Data Released Estimate Actual Pips Change
    (1 Hour post event )
    Pips Change
    (End of Day post event)
    JUN 2013 06/12/2013 21:00 GMT 2.50% 2.50% -27 +121

    June 2013 Reserve Bank of New Zealand Interest Rate Decision



    The Reserve Bank of New Zealand pledged to keep the benchmark interest rate at 2.50% throughout 2013 as Governor Graeme Wheeler warned that the ‘New Zealand dollar remains overvalued and continues to be a headwind for the tradables sector,’ and it seems as though the central bank will retain a wait-and-see approach over the near to medium-term in an effort to encourage a stronger recovery. Indeed, the cautious tone struck by the RBNZ dragged on the New Zealand dollar, with the NZDUSD slipping back below the 0.7950 region, but the higher-yielding currency regained its footing during the day as the pair closed at 0.8095.


    --- Written by David Song, Currency Analyst


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