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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: Federal Open Market Committee Meeting What’s Expected: Time of release: 07/31/2013 18:00 GMT, 14:00 EDT Primary Pair ...

      
   
  1. #31
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    EUR/USD- Trading the Fed Open Market Committee (FOMC) Meeting

    Trading the News: Federal Open Market Committee Meeting
    What’s Expected:
    Time of release: 07/31/2013 18:00 GMT, 14:00 EDT
    Primary Pair Impact: EURUSD
    Expected: 0.25%
    Previous: 0.25%
    DailyFX Forecast: 0.25%

    Why Is This Event Important:

    Beyond the Federal Open Market Committee’s (FOMC) interest rate announcement, further details surrounding the exit strategy may heighten the appeal of the U.S. dollar amid the growing discussion at the central bank to taper the asset-purchase program. As the Fed anticipates a stronger recovery in the second-half of the year, the policy statement accompanying the rate decision may sound less dovish this time around, and the central bank may show a greater willingness to move away from its easing cycle as the economy gets on a more sustainable path.
    Recent Economic Developments

    The Upside

    Release Expected Actual
    Durable Goods Orders (JUN) 1.4% 4.2%
    Change in Non-Farm Payrolls (JUN) 166K 195K
    Personal Spending (MAY) 0.3% 0.3%
    The Downside
    Release Expected Actual
    Existing Home Sales (MoM) (JUN) 1.5% -1.2%
    Housing Starts (MoM) (JUN) 5.0% -9.9%
    Gross Domestic Product (Annualized) (QoQ) (1Q F) 2.4% 1.8%

    The FOMC may turn increasingly upbeat towards the economy amid the pick up in job growth paired with the resilience in private sector consumption, and we may see a growing number of central bank officials adopt a more hawkish tone for monetary policy as the outlook for growth and inflation improves. However, the FOMC may continue to strike a cautious outlook for the region amid the persistent slack in the real economy, and the central bank may adjust the policy outlook in favor of its highly accommodative stance in order to encourage a stronger recovery.
    Potential Price Targets For The Rate Decision



    As the EURUSD remains largely capped by the 1.3300 handle, a more upbeat FOMC may spark a more meaningful reversal in the exchange rate, and we will be watching the downside targets ahead of the highly anticipated Non-Farm Payrolls report due out on Friday as the pair appears to have carved out a near-term top ahead of August. However, we may see a topside break in the EURUSD should the Fed shift its forward-guidance in favor of its highly accommodative policy stance, and the pair may coil up for another run at 1.3400 should the central bank sound more dovish this time around.

    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 is widely expected to maintain its current policy, but further details surrounding the exit strategy may spark a bullish reaction in the U.S. dollar as the central bank appears to be slowly moving away from its easing cycle. Therefore, if the FOMC sounds more upbeat this time around and shows a greater willingness to taper the asset-purchase program, we will need to see a red, five-minute candle following the policy statement to generate a sell entry on two-lots of EURUSD. 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 establish our first target. The second objective 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.
    On the other hand, the Fed may lay out a greater argument to retain its highly accommodative policy amid the ongoing slack in the real economy, and the central bank may keep the door open to shift its asset-purchase program in either direction in an effort to encourage a stronger recovery. As a result, if the FOMC shows a greater willingness to further embark on its easing cycle, 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)
    JUN 2013 06/19/2013 18:00 GMT 0.25% 0.25% -116 -109

    June 2013 Federal Open Market Committee Interest Rate Decision



    The FOMC showed a greater willingness to scale back its asset-purchase program even as the central bank stuck to its current policy in June, and we should see the Fed slowly move away from its easing cycle as they anticipate a stronger recovery in the second-half of the year. Indeed, the more upbeat tone from the FOMC propped up the greenback, with the EURUSD slipping below the 1.3300 handle, and the reserve currency held firm throughout the day as the pair closed at 1.3293.

    --- Written by David Song, Currency Analyst


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  2. #32
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    GBPUSD- Trading the Bank of England (BoE) Rate Decision

    Trading the News: Bank of England Interest Rate Decision
    What’s Expected:
    Time of release: 08/01/2013 11:00 GMT, 7:00 EDT
    Primary Pair Impact: GBPUSD
    Expected: 375B
    Previous: 375B
    DailyFX Forecast: 375B

    Why Is This Event Important:

    The Bank of England (BoE) is widely expected to keep the benchmark interest rate at 0.50% while maintaining the Asset-Purchase Facility at GBP 375B, and we may see another unanimous vote within the Monetary Policy Committee as the central bank anticipates a stronger recovery in the second-half of the year. Should the MPC refrain from releasing a policy statement, we may see a short-term rally in the British Pound ahead of BoE Minutes due out on August 14, and the central bank looks may slowly move away from its easing cycle over the coming months as the U.K. economy gets on a more sustainable path.

    Recent Economic Developments

    The Upside/Bullish Scenario
    Release Expected Actual
    Gross Domestic Product (QoQ) (2Q A) 0.6% 0.6%
    Consumer Price Index Core (YoY) (JUN) 2.3% 2.3%
    Producer Price Index- Input n.s.a. (YoY) (JUN) 4.2% 4.2%

    Sticky price growth along with the faster rate of growth may encourage the BoE to adopt a more hawkish tone for monetary policy, and the British Pound may show a bullish reaction to the rate decision should the central bank may start to lay out a more detailed exit strategy.

    The Downside/Bearish Scenario

    Release Expected Actual
    Mortgage Approvals (JUN) 59.7K 57.7K
    Net Consumer Credit (JUN) 0.7B 0.5B
    Average Weekly Earnings ex Bonus (3MoY) (MAY) 1.1% 1.0%

    The BoE may introduce additional measures to shore up the economy amid the ongoing weakness in private sector lending paired with the persistent slack in the real economy, and the sterling may face a sharp selloff should Governor Mark Carney may implement forward-guidance for monetary policy.

    Potential Price Targets For The Rate Decision



    Although the GBPUSD pierced below the 23.6% Fibonacci retracement of the 2009 range (1.5190-1.5200), the short-term rebound may gather pace over the next 24-hours of trading should the BoE adopt a more hawkish tone for monetary policy. In turn, any further developments surrounding the MPC’s exit strategy could trigger a larger move back towards the 38.2% retracement around 1.5680-90, but any hints for forward-guidance may dampen the appeal of the sterling as market participants continue to see scope for additional monetary support.

    How To Trade This Event Risk

    Trading the BoE rate decision may not be as clear cut as some of our previous trades as the central bank retains its current policy, but another unanimous vote may pave the way for a long British Pound trade as market participants scale back bets for additional monetary support. Therefore, if the committee refrains from releasing a policy statement, we will look for 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 place 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 BoE may keep the door open to expand its balance sheet further amid the ongoing weakness in the real economy, and the central bank may strike a dovish tone for monetary policy in an effort to encourage a stronger recovery. As a result, if the committee shows a greater willingness to further embark on its easing cycle, we will implement the same setup for a short pound-dollar trade as the long position mentioned above, just in reverse.

    Impact that the Bank of England Rate Decision has had on GBP during the last meeting

    Period Data Released Estimate Actual Pips Change
    (1 Hour post event )
    Pips Change
    (End of Day post event)
    JUL 2013 07/04/2013 11:00 GMT 375B 375B -156 -188

    July 2013 Bank of England Interest Rate Decision



    The Bank of England issued a rather dovish statement after maintaining its current policy in July and warned that ‘the significant upward movement in market interest rates’ may drag on the economy amid the ongoing weakness in private sector lending. Indeed, the fresh batch of central bank dragged on the British Pound, with the GBPUSD slipping below the 1.5100 handle, and the sterling continued to lose ground throughout the day as the pair closed at 1.5068.

    --- Written by David Song, Currency Analyst


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  3. #33
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    EURUSD- Trading the European Central Bank (ECB) Rate Decision

    Trading the News: European Central Bank Interest Rate Decision
    What’s Expected:
    Time of release: 08/01/2013 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 weigh on the single currency as the Governing Council adopts forward-guidance for monetary policy, but the fresh batch of central bank rhetoric may drag on the single currency should President Mario Draghi show a greater willingness to further embark on the easing cycle. As the euro-area remains mired in recession, the ECB may allude to additional rate cuts down the road, and Mr. Draghi may sounds more dovish this time around as the outlook for growth and inflation remains weak.

    Recent Economic Developments

    The Upside/Bullish Scenario

    Release Expected Actual
    Euro-Zone Economic Confidence (JUL) 92.5 92.5
    Euro-Zone Purchasing Manager Index Composite (JUL A) 49.1 50.4
    Euro-Zone Retail Sales (MoM) (MAY) 0.3% 1.0%

    The ECB may continue to call for a recovery later this year as confidence in the euro-area picks up, and a more neutral policy statement may set the tone for a short-term rally in the EURUSD as market participants scale back bets for more central bank support.

    The Downside/Bearish Scenario

    Release Expected Actual
    Euro-Zone Unemployment Rate (JUN) 12.2% 12.1%
    Euro-Zone Consumer Price Index Core (YoY) (JUL A) 1.2% 1.1%
    Euro-Zone Trade Balance s.a. (MAY) 16.2B 14.6B

    As the ECB looks for an export-led recovery, the ECB may look to limit the upside in the single currency, and we may see the Euro struggle to hold its ground should the Governing Council may show a greater willingness to implement more non-standard measures.

    Potential Price Targets For The Rate Decision



    As the EURUSD struggles to clear the 61.8% Fibonacci retracement from the February decline (1.3340), the pair looks poised to consolidate ahead of the ECB interest rate decision, but we may see a run at the June high (1.3415) should President Draghi strike a more upbeat tone for the monetary union. However, should the central bank show a greater willingness to embark on its easing cycle, the EURUSD may struggle to maintain the rebound from July (1.2754), and the single currency may work its way back towards the 23.6% retracement (1.2640-50) over the near to medium-term as market participants increase bets for additional monetary support.

    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 Governing Council is widely expected to retain its current policy, but the fresh batch of central bank rhetoric may set the stage for a long Euro trade should the ECB sound more upbeat this time around. Therefore, if President Draghi strikes an improved outlook and adopts a more neutral tone for monetary policy, we will need a green, five-minute candle following the statement to generate a long entry on two-lots of EURUSD. 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 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 protect our profits.

    On the other hand, the Governing Council may turn increasingly cautious towards the economy as the region struggles to return to growth, and the ECB may show a greater willingness to ease policy further in order to pull the region out of recession. As a result, if Mr. Draghi surprises with a rate cut or talks up bets for additional monetary support, we will implement the same strategy for a short euro-dollar trade as the long position laid out above, but 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)
    JUL 2013 07/04/2013 11:45 GMT 0.50% 0.50% -88 -77

    July 2013 European Central Bank Interest Rate Decision



    Although the European Central Bank stuck to its current policy in July, the Governor Council pledged to keep interest rates low for an ‘extended period’ of time as the monetary union remains mired in recession. Indeed, the ECB’s forward-guidance for monetary policy dragged on the Euro, with the EURUSD dipping below the 1.2900 handle, but we saw the pair consolidate during the holiday trade as it ended the day at 1.2912.

    --- Written by David Song, Currency Analyst


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  4. #34
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    EURUSD- Trading the U.S. Non-Farm Payroll (NFP) Report

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

    What’s Expected:
    Time of release: 08/02/2013 12:30 GMT, 8:30 EDT
    Primary Pair Impact: EURUSD
    Expected: 185K
    Previous: 195K
    DailyFX Forecast: 180K to 200K

    Why Is This Event Important:

    The U.S. economy is expected to add another 185K jobs in July and a positive development may spur a rally in the dollar as it raises the outlook for growth. As the Federal Reserve retains its forward-guidance for monetary policy, a strong employment report may further the argument to taper the asset-purchase program, and the central bank may start to lay out a more detailed exit strategy in the coming months as the recovery gradually gathers pace.

    Recent Economic Developments
    The Upside/Bullish Scenario

    Release Expected Actual
    ISM Manufacturing- Employment (JUL) -- 54.4
    Gross Domestic Product (Annualized) (QoQ) (2Q A) 1.0% 1.7%
    ADP Employment Change (JUL) 180K 200K

    As the fundamental developments coming out of the U.S. economy raises the scope of seeing a larger-than-expected rise in NFPs, a faster rate of job growth may encourage the FOMC to adopt a more hawkish tone for monetary policy, and a positive development may prompt a sharp rally in the greenback as the central bank appears to be slowly moving away from its easing cycle.

    The Downside/Bearish Scenario

    Release Expected Actual
    Consumer Confidence (JUL) 81.3 80.3
    Existing Home Sales (MoM) (JUN) 1.5% -1.2%
    Housing Starts (MoM) (JUN) 0.2% 0.0%

    Nevertheless, the persistent slack in the economy may continue to drag on employment, and a weak NFP report may spur a short-term pullback in the USD as market participants weigh the outlook for monetary policy.

    Potential Price Targets For The Release



    The EURUSD may have carved out a near-term top in July as it falls back from the 61.8% Fibonacci retracement around 1.3340, and the pair may continue to give back the rebound from 1.2754 should a strong NFP report further the Fed’s argument to scale back on quantitative easing. However, as a dismal employment print dampens the appeal of the reserve currency, a weaker-than-expected NFP report may spark another run at resistance (1.3340) as it raises the scope of seeing the FOMC delay its exit strategy.

    How To Trade This Event Risk

    Expectations for another 185K rise in Non-Farm Payrolls instills a bullish outlook for the reserve currency, and the market reaction may pave the way for a long U.S. dollar trade as the data heightens the scope of seeing the Fed scale back on QE. Therefore, if NFPs come in-line with or top 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 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 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 ongoing slack in the real economy may continue to drag on job growth, 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 implement the same trade setup for a long euro-dollar trade as the short position mentioned above, just in reverse.

    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)
    JUN 2013 07/05/2013 12:30 GMT 166K 195K -35 -44

    June 2013 U.S. Non-Farm Payrolls



    Employment in the world’s largest economy increased another 195K in June following the revised 195K rise the month prior, while the jobless rate held steady at an annualized 7.6% for the second consecutive month as discouraged workers returned to the labor force. The better-than-expected print propped up the greenback, with the EURUSD slipping below the 1.2850 region, and the reserve currency held rather steady throughout the North American trade as the pair closed at 1.2828.

    --- Written by David Song, Currency Analyst



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  5. #35
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    AUDUSD- Trading the Reserve Bank of Australia (RBA) Meeting

    Trading the News: Reserve Bank of Australia Interest Rate Decision
    What’s Expected:
    Time of release: 08/06/20134:30 GMT, 0:30 EDT
    Primary Pair Impact: AUDUSD
    Expected: 2.50%
    Previous: 2.75%
    DailyFX Forecast: 2.50%

    Why Is This Event Important:

    The Reserve Bank of Australia (RBA) is widely expected to push the benchmark interest rate to a fresh record-low of 2.50%, but the policy statement accompanying the rate decision may heavily influence the Australian dollar as market participants weigh the outlook for monetary policy.

    After taking extraordinary steps to shore up the $1T economy, there’s speculation that Governor Glenn Stevens will move away from the easing cycle after delivering one more rate cut in August, but the central bank head may look to further insulate the economy as the outlook for growth and inflation remains weak. According to Credit Suisse overnight index swaps, market participants are pricing a 91% for a 25bp rate cut, but still see 50bp worth of rate cuts over the next 12-months as the central bank favors a weaker exchange rate.

    Recent Economic Developments
    The Upside/Bullish Scenario
    Release Expected Actual
    Private Sector Credit (YoY) (JUN) 2.9% 3.1%
    Employment Change (JUN) 0.0K 10.3K
    Trade Balance (MAY) 53M 670M

    The RBA may strike a more neutral tone this time around amid the positive developments coming out of the region, and a less-dovish policy statement may help to prop up the Australian dollar should the central bank scale back its willingness to implement additional rate cuts.

    The Downside/Bearish Scenario

    Release Expected Actual
    Retail Sales (MoM) (JUN) 0.4% 0.0%
    Produce Price Index (YoY) (2Q) -- 1.2%
    Consumer Price Index (YoY) (2Q) 2.5% 2.4%

    Nevertheless, Governor Stevens may continue to favors lower borrowing costs given the weakening outlook for inflation, and we may see a sharp selloff in the Australian dollar should a rate cut be accompanied by a highly dovish policy statement.

    Potential Price Targets For The Rate Decision



    As the relative strength index on the AUDUSD fails to maintain the bullish trend dating back to May, a highly dovish RBA may spur fresh yearly lows in the exchange, and we may see a run at the 78.6% Fibonacci retracement around the 0.8700 handle, which coincides with the 38.2% expansion from the April decline. However, a more meaningful rebound may take shape in the aussie-dollar should the RBA retain its wait-and-see approach, and the pair may continue to threaten the 0.9300 region as it holds up as resistance.

    How To Trade This Event Risk

    Trading the given event risk instills a bearish outlook for the higher-yielding currency as the RBA is expected to push the benchmark interest rate to a fresh record-low, but a less-dovish statement accompanying the rate decision could pave the way for a long Australian dollar trade as market participants see an end to the easing cycle. Therefore, if Governor Stevens strikes an improved outlook for the $1T economy and talks down bets for lower borrowings costs, we will need to see a green, five-minute candle following the announcement to set us up for a long entry on two-lots of AUDUSD. Should the reaction favor buying the aussie-dollar, 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 protect our profits.

    On the other hand, the RBA may continue to see scope for lower interest rates amid the weakening outlook for growth and inflation, and Governor Stevens may continue to embark on the easing cycle in order to further insulate the economy. As a result, if the RBA cuts the benchmark interest rate by 25bp rate cut and strike a highly dovish tone for monetary policy, we will carry out the same setup for a short aussie-dollar trade as the long position mentioned above, just in the opposite direction.

    Impact that the RBA Interest Rate Decision has had on AUD during the last meeting

    Period Data Released Estimate Actual Pips Change
    (1 Hour post event )
    Pips Change
    (End of Day post event)
    JUL 2012 07/02/2013 4:30 GMT 2.75% 2.75% -44 -71

    July 2013 Reserve Bank of Australia Interest Rate Decision



    The Reserve Bank of Australia continued to warn of lower borrowing costs after holding the benchmark interest rate at 2.75%, and the central bank may continue to embark on its easing cycle in the second-half of the year in an effort to prompt a stronger recovery. The Australia dollar struggled to hold its ground following the dovish comments, with the AUDUSD slipping below the 0.9200 handle, and the higher-yielding currency continued to slide throughout the day as the pair closed at 0.9146.

    --- Written by David Song, Currency Analyst


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  6. #36
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    How Will the BoE

    Trading the News: Bank of England Inflation Report

    The Bank of England quarterly inflation report is likely to heavily impact the British Pound as the central bank is set to announce it updated assessment of the U.K. economy.
    What’s Expected:
    Time of release: 08/07/2013 09:30 GMT, 5:30 EDT
    Primary Pair Impact: GBPUSD
    Expected: --
    Previous: --
    DailyFX Forecast: --

    Why Is This Event Important:

    As the BoE pledges to adopt a ‘mixed strategy’ for monetary policy, there’s speculation that the central bank will introduce forward-guidance for monetary policy, and the fresh stance may shift the near-term outlook for the GBPUSD should the central bank introduce more non-standard measures to encourage a stronger recovery.

    The Upside/Bullish Scenario

    Release Expected Actual
    NIESR GDP Estimate (JUL) -- 0.7%
    Gross Domestic Product (QoQ) (2Q A) 0.6% 0.6%
    Consumer Price Index Core (YoY) (JUN) 2.3% 2.3%

    With the positive developments coming out of the U.K. economy, the BoE may steer away from adopting a threshold for monetary policy (like the Federal Reserve) and strike a similar tone to the European Central Bank, where the Monetary Policy Committee pledges to keep interests low for an extended period of time.

    The Downside/Bearish Scenario

    Release Expected Actual
    Mortgage Approvals (JUN) 59.7K 57.7K
    Net Consumer Credit (JUN) 0.7B 0.5B
    Average Weekly Earnings ex Bonus (3MoY) (MAY) 1.1% 1.0%

    Nevertheless, should the BoE implement a ‘qualitative approach’ for monetary policy and establish a threshold for unemployment or inflation, such a move could delay the MPC’s exit strategy.

    How To Trade This Event Risk

    Trading the quarterly inflation may not be as clear cut as some of our previous trades given the market speculation surrounding the central bank, but a more upbeat tone coming out of the BoE may pave the way for a long British Pound trade as the MPC turns increasingly optimistic towards the economy. Therefore, if the BoE raises its fundamental outlook for the region and refrains from implementing a threshold for its forward-guidance, we will need a green, five-minute candle following the release to consider a long entry on two-lots of GBPUSD. Once these conditions favor a long trade, we will place 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.
    On the other hand, should the BoE follow the Fed and implement a ‘qualities approach’ for monetary policy, expectations for a more accommodative MPC may spark a sharp selloff in the GBPUSD. As a result, if the central bank adopts a threshold for its forward-guidance, we will carry out the same strategy for a short pound-dollar trade as the long position mentioned above, just in reverse.
    Potential Price Targets For The Rate Decision





    The 50.0% Fibonacci expansion around the 1.5390-1.5400 may continue to hold up as resistance should the BoE adopt a similar approach to the FOMC, and we may see the 61.8% retracement (1.4850) come back on the radar should the pair search for support. However, a mere pledge to keep interests low for a prolonged period may have a limited impact in spurring a major decline in the exchange rate, and the GBPUSD may face whipsaw-like prices before a move higher as it puts in a higher low in August.

    Impact that the Bank of England Inflation Report has had on GBP during the last quarter

    Period Data Released Estimate Actual Pips Change
    (1 Hour post event )
    Pips Change
    (End of Day post event)
    MAY 2013 05/15/2013 9:30 GMT -- -- -21 -10

    May 2013 Bank of England Inflation Report



    Although the Bank of England said a recovery is now ‘in sight’ for the U.K., the central bank retained a rather cautious tone for the region as the pickup in economic activity remains ‘weak and uneven.’ Despite the upbeat comments, the British Pound did failed to benefit from the updated forecast, with the GBPUSD slipping below the 1.5200 handle, but the sterling firmed up throughout the day as the pair closed at 1.5233.

    --- Written by David Song, Currency Analyst


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  7. #37
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    Australia Employment Offers a More Meaningful AUD Rebound

    Trading the News: Australia Employment Change
    A second consecutive rise in Australian employment may encourage a more meaningful rebound in the AUDUSD as it dampens the Reserve Bank of Australia’s (RBA) scope to further embark on its easing cycle.

    What’s Expected:
    Time of release: 08/07/2013 1:30 GMT, 21:30 EDT
    Primary Pair Impact: AUDUSD
    Expected: 6.0K
    Previous: 10.3K
    DailyFX Forecast: -5.0K to 10.0K

    Why Is This Event Important:

    A 6.0K rise in employment may encourage the RBA to soften its dovish tone for monetary policy, but Governor Glenn Stevens may keep the door open to push the benchmark interest rate to a fresh record-low as the central bank continues to see the $1T economy growing below trend.

    The Upside/Bullish Scenario

    Release Expected Actual
    House Price Index (QoQ) (2Q) 1.0% 2.4%
    Private Sector Credit (MoM) (JUN) 0.3% 0.4%
    HIA New Home Sales (MoM) (JUN) -- 3.4%

    The pickup in private sector credit may help businesses to expand their labor force, and a marked pickup in job growth may generate a more meaningful rebound in the Australian dollar as it dampens bets for additional monetary support.

    The Downside/Bearish Scenario

    Release Expected Actual
    Trade Balance (JUN) 804M 602M
    ANZ Job Advertisements (MoM) (JUL) -- -1.1%
    Retail Sales (MoM) (JUN) 0.4% 0.0%

    However, the persistent slack in the real economy may continue to drag on the labor market, and a dismal print may push the AUDUSD back towards the 2013 low (0.8846) as it fuels speculation for another rate cut.

    How To Trade This Event Risk

    Expectations for a rebound in employment highlights a bullish outlook for the aussie, and the market reaction may pave the way for a long Australian dollar trade should the data raise the outlook for growth. Therefore, if job growth climbs 6.0K or greater in July, we will need a green, five-minute candle following the release to consider a long trade on two-lots of AUDUSD. Should market conditions favor a bullish trade, 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 an effort to lock-in our gains.
    In contrast, the persistent slack in the real economy may push businesses to scale back on hiring, and a weak jobs report prompt a selloff in the higher-yielding as it fuels bets for another rate cut. As a result, if Australia employment disappoints, we will implement the same setup for a short aussie-dollar trade as the long position laid out above, just in reverse.

    Potential Price Targets For The Release



    The positive jobs report may encourage a more meaningful correction in the Australian dollar, which could trigger a move back towards the 61.8% Fibonacci retracement around 0.9210-20, and a blowout print may threaten the bearish trend carried over from earlier this year as it raises the argument for the RBA to retain a wait-and-see approach throughout the remainder of the year. However, a AUDUSD may face a shallow correction on the back of a negative employment report, and we will be watching the 78.6% retracement around 0.8710-20, which lines up nicely with the 38.2% expansion.

    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)
    JUL 2013 07/11/2013 1:30 GMT 0.0K 10.3K +44 -27

    July 2013 Australia Employment Change



    Australia added 10.3K jobs in June following a 0.7K decline the month prior, while the jobless rate unexpectedly climbed to an annualized 5.7% from a revised 5.6% in June as discouraged workers returned to the labor force. The Australian dollar traded higher following the rebound in employment, with the AUDUSD pushing above the 0.9250 region, but the higher-yielding currency struggled to hold its ground as the pair ended the day at 0.9186.

    --- Written by David Song, Currency Analyst

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  8. #38
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    Will USDCAD Threaten the Bullish Trend on Canada Employment?

    Trading the News: Canada Net Change in Employment

    The Canadian economy is expected to add 10.0K jobs in July and a strong rebound in employment should prop up the loonie as it raises the outlook for growth.

    What’s Expected:
    Time of release: 08/09/2013 12:30 GMT, 8:30 EDT
    Primary Pair Impact: USDCAD
    Expected: 10.0K
    Previous: -0.4K
    DailyFX Forecast: -5.0K to 15.0K

    Why Is This Event Important:

    Although the Bank of Canada (BoC) softened its tone for a rate hike, a marked improvement in the labor market may encourage Governor Stephen Poloz to adopt a more hawkish tone for monetary policy, and a shift in central bank rhetoric may heighten the appeal of the Canadian dollar as market participants weigh the outlook for monetary policy.

    The Upside/Bullish Scenario

    Release Expected Actual
    International Merchandise Trade (JUN) -0.51B -0.47B
    Retail Sales (MoM) (MAY) 0.4% 1.9%
    Wholesale Sales (MoM) (MAY) 0.3% 2.3%

    The pickup in private sector consumption may prompt businesses to expand their labor force, and a pickup in job growth may spark a bullish reaction in the Canadian dollar should the data fuel speculation for higher borrowing costs.

    The Downside/Bearish Scenario

    Release Expected Actual
    Ivey Purchasing Manager Index s.a. (JUL) 57.0 48.4
    Gross Domestic Product (MoM) (MAY) 0.3% 0.2%
    Business Outlook Future Sales (2Q) 30.00 9.00

    On the other hand, the sharp slowdown in business spending may point to a further contraction in employment, and a dismal print may spur a near-term rally in the USDCAD as it raises the scope of seeing the BoC carry its wait-and-see approach into the following year.

    How To Trade This Event Risk

    Forecasts for a rebound in employment favors a bullish outlook for the loonie, and a marked pickup in job growth may set the stage for a long Canadian dollar trade as it fuels bets for higher borrowing costs. Therefore, if the economy adds 10.0K jobs or more in July, we will need to see a red, five-minute candle following the report to consider a sell entry on two-lots of USDCAD. Should these conditions warrant a short trade, 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 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 ongoing weakness in the real economy along with the contraction in business spending may drag on hiring, and a dismal print may weaken the loonie as it dampens the scope for a rate hike. As a result, if the print falls short of market forecast, we will implement the same strategy for a long dollar-loonie trade as the short position laid out above, just in the opposite direction.

    Potential Price Targets For The Release



    The upward trending channel in the USDCAD looks poised to take shape over the remainder of the year as it breaks out of a long-term consolidation phase, but we may see the dollar-loonie threaten the bullish trend should the data spur a shift in the policy outlook. However, should the data continue to dampen the scope for higher borrowing costs, we should see the USDCAD continue to carve a series of higher highs paired with higher lows, and the loonie may continue to underperform against its U.S. counterpart as the BoC retains a rather neutral tone for monetary policy.

    Impact that Canada’s Employment 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)
    JUN
    2012
    07/05/2013 12:30 GMT -7.5K -0.4K +62 +56

    June 2013 Canada Net Change in Employment



    Canadian employment slipped 0.4K in June following the 95.0K advance the month prior, while the jobless rate held steady at an annualized 7.1% for the second consecutive month. Despite the better-than-expected print, the Canadian dollar struggled to hold its ground following the data, with the USDCAD climbing above the 1.0550 figure, and the loonie held a weaker tone throughout the day as the pair closed at 1.0569.

    --- Written by David Song, Currency Analyst


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  9. #39
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    GBPUSD- U.K. Inflation Report to Make or Break British Pound

    Trading the News: U.K. Consumer Price Index
    The U.K. Consumer Price report could be a game-changer for the British Pound as the Bank of England (BoE) adopts forward-guidance for monetary policy.
    What’s Expected:
    Time of release: 08/13/2013 8:30 GMT, 4:30 EDT
    Primary Pair Impact: GBPUSD
    Expected: 2.8%
    Previous: 2.9%
    DailyFX Forecast: 2.8% to 3.0%

    Why Is This Event Important:

    Given the BoE’s track record of struggling to achieve the 2% target for inflation, a stronger-than-expected inflation report may heighten the scope of seeing the central bank implement its exit strategy ahead of schedule, but a slower rate of price growth may trigger a sharp selloff in the GBPUSD should the data raise the Monetary Policy Committee’s (MPC) scope to retain its highly accommodative policy stance.

    The Upside/Bullish Scenario

    Release Expected Actual
    Retail Sales ex Auto Fuel (MoM) (JUN) 0.2% 0.2%
    Jobless Claims Change (JUN) -8.0K -21.2K
    Average Weekly Earnings inc Bonus (3MoY) (MAY) 1.4% 1.7%

    Bright signs coming out of the U.K. economy may prompt businesses to hike consumer prices, and a faster rate of price growth may dampen speculation for additional monetary support as the BoE adds the inflation ‘knock-out’ to its forward guidance.

    The Downside/Bearish Scenario

    Release Expected Actual
    BRC Shop Price Index (JUL) -- -0.5%
    Net Consumer Credit (JUN) 0.7B 0.5B
    CBI Business Optimism (JUL) 8 7

    Nevertheless, U.K. firms may offer discounted prices in order to draw increased demands, and a marked slowdown in consumer prices may threaten the bullish trend in the GBPUSD as Governor Mark Carney keeps the door open to expand the Asset-Purchase Facility (APF) beyond the GBP 375B limit.

    How To Trade This Event Risk

    Expectations for a slower rate of inflation casts a bearish outlook for the sterling, but a positive development may set the stage for a long British Pound trade as it raises the BoE’s scope to implement its exit strategy ahead of schedule. Therefore, if the headline and core reading for inflation tops market expectations in July, we will need to see a green, five-minute candle following the release to consider a long entry on two-lots of GBPUSD. Should the market reaction favor a long trade, we will set the initial stop at the nearby swing low or a reasonable distance from the entry, and we will use this risk to 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.

    On the other hand, the persistent margin of slack in the real economy may drag on consumer price growth, and a soft CPI print may trigger a sharp selloff ahead of the BoE Minutes as it heightens bets for more quantitative easing. As a result, if the headline reading for inflation slips to 2.8% or lower, we will implement the same strategy for a short pound-dollar trade as the long position laid out above, just in the opposite direction.

    Potential Price Targets For The Release



    A slower rate of inflation may spark a more meaningful pullback in the GBPUSD, and we may see the pound-dollar threaten the bullish trend carried over from the previous month should the data raise bets for more QE. However, an upside surprise in the U.K. Consumer Price report may spark a bullish breakout in the exchange rate, and the GBPUSD may work its way back towards the 38.2% Fibonacci retracement of the 2009 range as limits the BoE’s scope to retain its highly accommodative policy stance.

    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)
    JUN 2013 07/16/2013 8:30 GMT 3.0% 2.9% -30 +57
    June 2013 U.K. Consumer Price Index


    The headline reading for U.K. inflation increased an annualized 2.9% in June after expanding 2.7% the month prior, while the core rate climbed to 2.3% from 2.2% to mark the fastest pace of growth since March. The weaker-than-expected CPI print dragged on the British Pound, with the GBPUSD slipping below the 1.5050 region, but the sterling regained its footing during the day to closed at 1.5157.

    --- Written by David Song, Currency Analyst


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  10. #40
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    Will German 2Q GDP Push the EURUSD Back Towards 1.3400?

    Trading the News: German Gross Domestic Product
    With Germany’s Gross Domestic Product (GDP) report due out ahead of the Euro-Zone print, the developments coming out of Europe’s largest economy may set the tone for the EURUSD as the region is expected to lead the recovery in the monetary union.
    What’s Expected:
    Time of release: 08/14/20136:00 GMT, 2:00 EDT
    Primary Pair Impact: EURUSD
    Expected: 0.6%
    Previous: 0.1%
    DailyFX Forecast: 0.3% to 0.6%

    Why Is This Event Important:

    Germany is expected to grow another 0.6% in the second-quarter and a positive release may heighten the appeal of the single currency as it dampens the scope of seeing the European Central Bank (ECB) further embark on its easing cycle.

    The Upside/Bullish Scenario

    Release Expected Actual
    Trade Balance (JUN) 15.0B 16.9B
    Industrial Production s.a. (MoM) (JUN) 0.3% 2.4%
    IFO Business Climate (JUL) 106.1 106.2

    The rebound in business sentiment along with the pickup in global trade may pave the way for a strong GDP report, and a marked expansion in the growth rate may spark a bullish reaction in the EURUSD as it raises the prospects of seeing the euro-area emerging from the recession later this year.

    The Downside/Bearish Scenario

    Release Expected Actual
    Purchasing Manager Index- Services (JUL F) 52.5 51.3
    Unemployment Rate (JUL) 6.8% 6.8%
    Retail Sales (MoM) (JUN) 0.2% -1.5%

    At the same time, the ongoing weakness in the labor market along with the slowdown in private sector consumption may weigh on the growth rate, and we may see the Euro struggle to hold its ground following a dismal print as it fuels speculation of seeing another rate cut from the ECB.



    Expectations for a faster rate of growth instills a bullish outlook for the single currency, and the market reaction may set the stage for a long Euro trade as market participants scale back bets for additional monetary support. Therefore, if GDP expands 0.6% or greater in the second-quarter, we will need to see a green, five-minute candle following the release to consider a long entry on two-lots of EURUSD. Should the reaction favor buying the single currency, 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 target. The second objective 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 protect our gains.

    In contrast, the GDP report may warn of a prolonged recession in the euro-area amid the persistent slack in the real economy, and a weak growth figure may spark a sharp selloff in the single currency as it fuels bets for another ECB rate cut. As a result, 2Q GDP misses market expectations, we will implement the same strategy for a short euro-dollar trade as the long position mentioned above, just in reverse.

    Potential Price Targets For The Release

    EURUSD Daily



    The technical outlook points to further EURUSD weakness as it fails to maintain the upward trend carried over from the previous year, and the pair may have carved a lower high just shy of the 1.3400 handle as the ECB keeps the door open to push the benchmark interest rate to a fresh record-low. However, the rebound ahead of the 50.0% Fibonacci retracement (1.3240) may gather pace on a positive GDP report, and we may see a more meaningful run at 1.3400 should the data dampen expectations for additional monetary support.

    Impact that the German GDP report has had on EUR during the last quarter

    Period Data Released Estimate Actual Pips Change
    (1 Hour post event )
    Pips Change
    (End of Day post event)
    1Q A 2013 05/15/2013 9:00 GMT 0.3% 0.1% -32 -43

    1Q 2013German Gross Domestic Product



    Europe’s largest economy grew 0.1% during the first quarter after contracting 0.7% during the last three-months of 2012, with the Bundesbank noting that the weaker-than-expected print may have been driven by an unusually long winter season. The Euro struggled to hold its ground following the weaker-than-expected print, with the EURUSD slipping below the 1.2900 handle, and the single currency continued to lose ground throughout the North American trade as the pair closed at 1.2884.

    --- Written by David Song, Currency Analyst


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