Trading News Events

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

Despite forecasts for a downtick in the U.S. Consumer Price Index (CPI), stickiness in the core rate of inflation may boost the appeal of the greenback and spark a near-term pullback in EUR/USD as it puts pressure on the Federal Reserve to raise the benchmark interest rate sooner rather than later.

What’s Expected:

Why Is This Event Important:

The growing risk of overshooting the 2% inflation-target may spur a larger dissent within Federal Open Market Committee (FOMC), and we may see a growing number of central bank officials push for a 2016 rate-hike especially as the U.S. economy approaches ‘full-employment.’ However, Chair Janet Yellen may try to buy more time at the next quarterly meeting in September as the central bank reiterates ‘market-based measures of inflation compensation remain low; most survey-based measures of longer-term inflation expectations are little changed, on balance, in recent months.’

How To Trade This Event Risk

Bearish USD Trade: Headline & Core Inflation Narrow in July

• Need green, five-minute candle following the print to consider a long position 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: U.S. Consumer Price Report 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 the opposite direction.

Potential Price Targets For The Release
EUR/USD D1

• EUR/USD may further retrace the decline from the May high (1.1615) as the pair appears to be breaking out of the wedge/triangle formation carried over from June, with a break of the 100-Day SMA (1.1226) opening up the next topside hurdle around 1.1270 (38.2% retracement) to 1.1290 (23.6% retracement).
• Key Resistance: 1.1760 (61.8% retracement) to 1.1810 (38.2% retracement)
• Key Support: Interim Support: 1.0380 (78.6% expansion) to 1.0410 (61.8% expansion)

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Trading the News: U.K. Jobless Claims Change

Even though U.K. Jobless Claims are projected to increase another 9.0K in July, signs of stronger wage growth may keep the British Pound afloat, with GBP/USD at risk of staging a larger recovery should the data tame market expectation for additional monetary support.

What’s Expected:

Why Is This Event Important:

The Bank of England (BoE) is widely anticipated to further embark on its easing cycle this year as ‘a majority of members expect to support a further cut in Bank Rate to its effective lower bound,’ but the central bank may move to the sidelines after delivering the comprehensive easing packing earlier this month especially as Governor Mark Carney rules out a zero-interest rate policy (ZIRP) for the U.K.

How To Trade This Event Risk

Bullish GBP Trade: U.K. Job/Wage Growth Picks Up

• 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: Labor Market Report Fails to Meet Market Forecast

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

Potential Price Targets For The Release
GBP/USD Daily

• Broader outlook for GBP/USD remains tilted to the downside as it breaks down from the wedge/triangle formation carried over from late-June, with both price and the Relative Strength Index (RSI) largely preserving a bearish formation, but the pair may stage a large recovery over the coming days as it appears to have marked a failed run at the 2016 low (1.2788).
• Key Resistance: 1.4880 (50% retracement) to 1.4930 (38.2% expansion)
• Key Support: 1.2460 (61.8% expansion) to 1.2500 pivot

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Trading the News: U.S. Non-Farm Payrolls (NFP)

A 180K expansion in U.S. Non-Farm Payrolls (NFP) accompanied by a downtick in the jobless rate may trigger a near-term decline in EUR/USD as the ongoing improvement in the labor market puts increased pressure on the Federal Open Market Committee (FOMC) to raise the benchmark interest rate sooner rather than later.

What’s Expected:

Why Is This Event Important:

The next interest-rate decision on September 21 may reveal a growing dissent within the FOMC as Chair Janet Yellen argues ‘the case for an increase in the federal funds rate has strengthened in recent months,’ but a marked slowdown in Average Hourly Earnings may drag on interest-rate expectations as the committee persistently warns ‘most survey-based measures of longer-run inflation expectations were little changed, on balance, while market-based measures of inflation compensation remained low.’

How To Trade This Event Risk

Bullish USD Trade: NFP Expands 180K or Greater

• Need red, five-minute candle following the print 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 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. Job/Wage growth Disappoints

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

Potential Price Targets For The Release
EUR/USD Daily

• Failure to preserve the bullish formation from the end of July may spur a larger decline in EUR/USD especially as the Relative Strength Index (RSI) follows suit, with a break/close below 1.1110 (50% retracement), which also lines up with the 200-Day SMA (1.1114), raising the risk for a move back towards the July low (1.0951).
• Key Resistance: 1.1760 (61.8% retracement) to 1.1810 (38.2% retracement)
• Key Support: Interim Support: 1.0380 (78.6% expansion) to 1.0410 (61.8% expansion)

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

Even though the European Central Bank (ECB) is expected to retain the zero-interest rate policy (ZIRP) in September, a string of adjustments to the non-standard measures may trigger a near-term selloff in EUR/USD should the central bank take additional steps to support the monetary union.

What’s Expected:

Why Is This Event Important:

The ECB may fine-tune its asset-purchases and extend the duration of its quantitative easing (QE) program as the Governing Council struggles to achieve its one and only mandate for price stability, but the euro-dollar stands at risk of facing a similar reaction to the March 10 policy meeting should President Mario Draghi and Co. endorse a wait-and-see approach for monetary policy.

How To Trade This Event Risk

Bearish EUR Trade: ECB Adjusts/Extends QE Program

• 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 Sticks with Status Quo

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

Potential Price Targets For The Release
EURUSD Daily

• The near-term outlook for EUR/USD has become more constructive following the failed attempt to push below former resistance around 1.1110 (50% retracement), and the pair may continue to retrace the decline from the August high (1.1365) should the ECB stick to the sidelines.
• Key Resistance: 1.1760 (61.8% retracement) to 1.1810 (38.2% retracement)
• Key Support: Interim Support: 1.0380 (78.6% expansion) to 1.0410 (61.8% expansion)

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(all images/charts were made using Metatrader 5 software and free indicators from MQL5 CodeBase)

Trading the News: Bank of England Interest Rate Decision

The Bank of England (BoE) interest rate decision may trigger a short-squeeze in British Pound and generate a relief rally in GBP/USD should the central bank talk down bets for an imminent rate-cut.

What’s Expected:

Why Is This Event Important:

Even though the Monetary Policy Committee (MPC) warns ‘a majority of members expect to support a further cut in Bank Rate to its effective lower,’ the BoE may preserve the current policy throughout the remainder of the year as there appears to be a limited risk for a U.K. recession. With Deputy Governor Minouche Shafik scheduled to depart in February, Governor Mark Carney and Co. may endorse a wait-and-see approach for the foreseeable future as the central bank sees a risk of overshooting the 2% inflation-target over the policy horizon.

How To Trade This Event Risk
Bullish GBP Trade: BoE Implements Range of New Easing Measures

• Need green, five-minute candle following the rate decision to consider a long GBP/USD trade.
• If market reaction favors a long sterling trade, buy 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: MPC Sticks with Status Quo

• 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 Daily

• GBP/USD may face range-bound conditions over the near to medium-term as it preserves the range from July, but the pair may face a near-term short-squeeze as the exchange rate appears to be carving an ascending triangle formation, while BoE Governor Mark Carney rules out a zero-interest rate policy (ZIRP) for the U.K.
• Key Resistance: 1.3870 (78.6% expansion) to 1.3900 (50% retracement)
• Key Support: 1.2450 (61.8% expansion) to 1.2500 pivot

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Trading the News: Canada Consumer Price Index (CPI)

Despite forecasts for a uptick in Canada’s Consumer Price Index (CPI), a marked slowdown in the core rate of inflation may drag on the loonie and spur a near-term rebound in USD/CAD as it puts pressure on the Bank of Canada (BoC) to further support the real economy.

What’s Expected:

Why Is This Event Important:

Easing price pressures may push the BoC to adopt a dovish outlook for monetary policy as the central bank warns ‘risks to the profile for inflation have tilted somewhat to the downside since July,’ and Governor Stephen Poloz may prepare Canadian households and businesses for lower borrowing-costs as global growth in the first half of 2016 was slower than the Bank had projected'.

How To Trade This Event Risk

Bullish CAD Trade: Headline & Core CPI Beat Market Expectations

• 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: Canada Inflation Report Disappoints

• 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

• USD/CAD may face a larger pullback as the pair appears to have made a failed run at the July high (1.3253), with a break/close below the Fibonacci overlap around 1.2930 (61.8% expansion) to 1.2990 (23.6% retracement) raises the risk for a move back towards the monthly low (1.2821).
• Key Resistance: 1.3560 (100% expansion) to 1.3630 (38.2% retracement)
• Key Support: 1.2510 (78.6% retracement) to 1.2520 (38.2% expansion)

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Trading the News: U.S. ISM Non-Manufacturing

A rebound in the U.S ISM Non-Manufacturing survey may fuel the near-term strength in the greenback and spark a selloff in EUR/USD should the report boost expectations for a 2016 Fed rate-hike.

Why Is This Event Important:

It seems as the Federal Open Market Committee (FOMC) is taking a similar path to 2015 as a growing number of officials endorse higher borrowing-costs, and the central bank may continue to take a more collective approach to prepare U.S. households and businesses for a December rate-hike as ‘the Committee judges that the case for an increase in the federal funds rate has strengthened.’ However, market participants may pay increased attention to the 2017-rotation as the three dissenting members from the September interest-rate decision (Esther George, Loretta Mester, and Eric Rosengren) give up their votes, and the decline in the long-run forecast for the federal funds rate may become a key theme in the year ahead as Chair Janet Yellen continues to endorse a ‘gradual’ path in normalizing monetary policy.

How To Trade This Event Risk

Bullish USD Trade: ISM Non-Manufacturing Survey Rebounds to 53.0 or Higher

• Need red, five-minute candle following the print to consider a short position 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: Gauge for U.S. Service-Based Activity 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

Broader outlook for EUR/USD remains tilted to the upside as price & the Relative Strength Index (RSI) preserve the bullish formations from earlier this year, but the pair may face a narrowing range going through the first full-week of October as it remains stuck within the wedge/triangle formation carried over from the summer months.

• Interim Resistance: 1.1420 (23.6% retracement) to 1.1428 (June high)
• Interim Support: 1.0912 (June low) to 1.0940 (61.8% retracement)

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

A material pickup in both the headline and core U.K. Consumer Price Index (CPI) may sap the bearish sentiment surrounding the British Pound and spark a larger recovery in GBP/USD especially as a growing number of Bank of England (BoE) officials see a greater threat of overshooting the 2% target for inflation.

What’s Expected:

Why Is This Event Important:

Even though the BoE argues ‘a majority of members expect to support a further cut in Bank Rate to its effective lower bound,’ heightening price pressures may keep the Monetary Policy Committee (MPC) on the sidelines throughout the remainder of the yearas Deputy Governor Jon Cunliffe warns the next quarterly inflation due out on November 3 will reflect the sharp decline in the exchange rate. In turn, GBP/USD may face a more meaningful correction as the BoE looks poised to endorse a wait-and-see approach ahead of 2017, but the broader outlook for the sterling remains tilted to the downside as the risk of a ‘hard Brexit’ clouds the outlook for growth and inflation.

How To Trade This Event Risk

Bullish GBP Trade: Headline & Core CPI Pick Up in September

• Need green, five-minute candle following the print to consider a long GBP/USD trade.
• If market reaction favors long sterling, buy 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. Inflation Report Falls Short of Market Forecast

• 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 Daily

• Broader outlook for GBP/USD remains tilted to the downside as price & the Relative Strength Index (RSI) preserve the bearish trends carried over from the previous months, but the failure to close below 1.2100 (61.8% expansion) raises the risk for a larger correction in the exchange rate; will keep a close eye on the RSI, with a move with a move out of oversold territory (above 30) accompanied by a break of the bearish formation opening up the first topside target around 1.2360 (50% retracement) followed by 1.2460 (61.8% expansion).
• Interim Resistance: 1.2920 (100% expansion) to 1.2950 (23.6% expansion)
• Interim Support: 1.1905 (2016-low) and 1.2100 (61.8% expansion)

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Originally Posted by TheNews

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

A material pickup in both the headline and core U.K. Consumer Price Index (CPI) may sap the bearish sentiment surrounding the British Pound and spark a larger recovery in GBP/USD especially as a growing number of Bank of England (BoE) officials see a greater threat of overshooting the 2% target for inflation.
...

GBP/USD M5: 47 pips price movement by U.K. Consumer Price Index news event

Trading the News: Bank of Canada Interest Rate Decision

The Canadian dollar may show a limited reaction to the Bank of Canada’s (BoC) October interest rate decision as Governor Stephen Poloz and Co. are expected to retain the current policy, but the near-term decline in USD/CAD may largely unravel should the monetary policy report fuel bets for more easing.

What’s Expected:

Why Is This Event Important:

The BoC may show a greater willingness to implement lower borrowing-costs as the ‘risks to the profile for inflation have tilted somewhat to the downside since July,’ and a reduction in the central bank’s economic projections may drag on the local currency as market participants boosts bets for additional monetary support. However, Governor Poloz and Co. may continue to advocate a wait-and-see approach as the central bank anticipates a ‘substantial rebound’ in the second-half of 2016, and the fresh comments may boost the appeal of the Canadian dollar should the committee sound upbeat this time around.

How To Trade This Event Risk
Bullish CAD Trade: BoC Advocates Wait-and-See Approach

• Need to see red, five-minute candle following the decision 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: Monetary Policy Statements Boosts Bets for Additional Monetary Support

• 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

Failure to test the monthly opening range accompanied with the recent series of lower-highs raises the risk for a further decline in USD/CAD especially as the Relative Strength Index (RSI) fail to preserve the bullish formation carried over from August; break/close below the Fibonacci overlap around 1.2980 (61.8% retracement) to 1.2990 (23.6% retracement) may spur a test of the upward trend from the May low (1.2461).

• Interim Resistance: 1.3300 (50% retracement) to 1.3310 (38.2% retracement)
• Interim Support: 1.2764 (August low) to 1.2770 (38.2% expansion)

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