Trading News Events

Trading the News: U.K. Retail Sales
U.K. Retail Sales are expected to increase for the third consecutive month in July and a pickup in private sector consumption may spur a bullish breakout in the GBPUSD as it remains one of the leading drivers of growth.
What’s Expected:
Time of release: 08/15/2013 8:30 GMT, 4:30 EDT
Primary Pair Impact: GBPUSD
Expected: 0.6%
Previous: 0.2%
DailyFX Forecast: 0.2% to 1.0%

Why Is This Event Important:

Should household spending pickup in July, a positive sales report may raise the scope of seeing the Bank of England (BoE) normalize monetary policy ahead of schedule, and the British Pound may continue to outperform against its major counterparts amid the shift in the policy outlook.

Bullish Argument/Scenario

Release	Expected	Actual
Jobless Claims Change (JUL)	-15.0K	-29.2K
Average Weekly Earnings inc Bonus (MAY)	2.0%	2.1%
GfK Consumer Confidence (JUL)	-19	-16

The pickup in wage growth along with the ongoing improvement in consumer sentiment raises the scope of seeing a marked rise in retail sales, and a positive print may spark a growing rift within the BoE as Monetary Policy Committee member Martin Weale dissents against the majority.

Bearish Argument/Scenario

Release	Expected	Actual
Consumer Price Index (YoY) (JUL)	2.8%	2.8%
Producer Price Index- Output n.s.a. (YoY) (JUN)	2.1%	2.1%
Net Consumer Credit (JUN)	0.7B	0.5B

However, sticky inflation paired with the slowdown in private credit may prompt U.K. households to scale back on spending, and BoE Governor Mark Carney may keep the door open to expand the balance sheet further in an effort to encourage a stronger recovery.

How To Trade This Event Risk

Should U.K. retail sales increase 0.6% or greater in July, we will need to see a green, five-minute candle following the release to consider a buy entry on two-lots of GBPUSD. If the market reaction favors a long trade, 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 protect our profits.

On the other hand, a dismal print should keep the GBPUSD within the downward trend from earlier this year, and 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

GBPUSD Daily



Although the British Pound remains stuck in the downward trend from earlier this year, a third straight rise in U.K. retail sales may pave the way for a bullish breakout. In turn, we may see the GBPUSD make a more meaningful run at the 78.6% Fibonacci expansion around 1.5610-20, but the pair may fall back towards trendline support (which lies up with the 38.2% expansion- 1.5300) should the data disappoint.

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)
JUN 2013	07/18/2013 8:30 GMT	0.2%	0.2%	+45	+63

June 2013 U.K. Retail Sales



Retail spending in the U.K. increased another 0.2% after expanding 2.1% the month prior, and the BoE may find it increasingly difficult to preserve its highly accommodative policy stance as the central bank anticipates a faster recovery in the second-half of the year. Indeed, the British Pound trader higher following the print, with the GBPUSD climbing above the 1.5200 handle, and the sterling continued to gain ground during the North American trade as the pair ended the day at 1.5222.

--- Written by David Song, Currency Analyst


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Trading the News: U. of Michigan Confidence
A rebound in the U. of Michigan Confidence survey should heighten the appeal of the U.S. dollar as it adds to the argument for the Federal Reserve to taper its asset-purchase program at the September 17-18 meeting.

What’s Expected:
Time of release: 08/16/2013 13:55 GMT, 9:55 EDT
Primary Pair Impact: EURUSD
Expected: 85.2
Previous: 85.1
DailyFX Forecast:84.0 to 87.0

Why Is This Event Important:

An uptick in household sentiment should instill an improved outlook for the world’s largest economy as private sector consumption remains one of the largest drivers of growth, and we may see a growing number of Fed officials drop their dovish tone for monetary policy as the U.S. economy gets on a more sustainable path.

Bullish Argument/Scenario

Release	Expected	Actual
Personal Spending (JUN)	0.5%	0.5%
Gross Domestic Product (Annualized) (QoQ) (2Q A)	1.0%	1.7%
New Home Sales (MoM) (JUN)	1.7%	8.3%

Signs of a stronger recovery in the second-half of 2013 may encourage a marked rebound in consumer sentiment, and a positive confidence report may produce a more meaning rebound in the reserve currency as it dampens the FOMC’s scope to retain its highly accommodative policy stance.

Bearish Argument/Scenario

Release	Expected	Actual
Consumer Price Index (YoY) (JUL)	2.0%	2.0%
Personal Income (JUN)	0.4%	0.3%
Change in Non-Farm Payrolls (JUL)	185K	162K

Nevertheless, subdued wage growth paired with the uptick in inflation may lead to a further decline in household confidence, and a dismal print may produce further weakness in the greenback as it limits the scope of seeing the Fed scale back on quantitative easing in the month ahead.

How To Trade This Event Risk

Should the U. of Michigan survey advance to 85.2 or higher in August, we will need a green, five-minute candle following the print to draw up a sell entry on two-lots of EURUSD. If the market reaction favors 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 generate 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 reaches its mark in an effort to lock-in our gains.

In contrast, a reading below market expectations may further dampen the appeal of the USD, and we will carry out the same setup for a long euro-dollar trade as the short position mentioned above, just in reverse.

Potential Price Targets For The Release
EURUSD Daily

The EURUSD may make a more meaning run at the 1.3400 handle should the U. of Michigan Confidence survey fall short of market forecast, and the greenback may face additional headwinds ahead of the Fed Symposium scheduled for the following week should the data raise the scope of seeing the central bank retain its highly accommodative policy stance for an extended period of time.

However, should the confidence survey raise the outlook for growth, we may see the EURUSD continue to carve a lower top in August, and the pair may persistently give back the rebound from the previous month as it fails to maintain the bullish trend.

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)
JUL P 2013	07/12/2013 13:55 GMT	84.7	83.9	+30	+44

July 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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Trading the News: U.S. Consumer Confidence

U.S. Consumer Confidence is expected to narrow for the second month in August and a marked downturn may produce a spark a selloff in the U.S. dollar as it raises the Fed’s scope to maintain its highly accommodative policy stance over the near to medium-term.

What’s Expected:
Time of release: 08/27/2012 14:00 GMT, 10:00 EDT
Primary Pair Impact: EURUSD
Expected: 79.0
Previous: 80.3
DailyFX Forecast: 78.0 to 82.0

Why Is This Event Important:

Another drop in household confidence may dampens bets of seeing the FOMC taper its $85 asset-purchase program at the September 17-18 meeting, and the central bank continue to delay its exit strategy in an effort to encourage a stronger recovery.

Expectations: Bearish Argument/Scenario

Release	Expected	Actual
Durable Goods Orders (JUL)	-4.0%	-7.3%
Advance Retail Sales (MoM) (JUL)	0.3%	0.2%
Average Hourly Earnings (YoY) (JUL)	2.2%	1.9%

The slowdown in private sector consumption could be indicative of a further slowdown in household sentiment, and a dismal print is likely to drag on the USD as it dampens the outlook for growth and inflation.

Risk: Bullish Argument/Scenario

Release	Expected	Actual
House Price Index (MoM) (JUN)	0.6%	0.7%
Existing Home Sales (MoM) (JUL)	1.4%	6.5%
Quarterly Gross Domestic Product (Annualized) (2Q A)	1.0%	1.7%

Nevertheless, the more broad-based recovery in the housing market may help to prop up consumer confidence, and an unexpected uptick in the Conference Board’s survey may produce a more meaningful rebound in the reserve currency amid the growing discussion at the Fed to scale back on quantitative easing.

How To Trade This Event Risk( )

Bearish USD Trade: Consumer Confidence narrows to 79.0 or lower

• Need green, five-minute candle after the report to consider a long EURUSD trade
• If the market reaction favors a buy trade, establish long with two position
• Place stop at the near-by swing low/reasonable distance from entry; need at least 1:1 risk-to-reward
• Shift stop to entry on remaining position once initial target is met; set reasonable limit

Bullish USD Trade: Sentiment exceeds market forecast

• Need red, five-minute candle following the release to look at a short EURUSD entry
• Implement same strategy as the bearish USD trade, just in reverse

Potential Price Targets For The Release

• Fails to maintain upward trending channel; appears to be carving top
• Keep an eye on the bearish divergence in the Relative Strength Index
• Soft resistance/pivot: 1.3450; confluence on Fibonacci retracements at 1.3500
• Need a close below 61.8% retracement (1.3340) for larger downturn
• Interim support: 1.3240 (78.6% expansion), 1.3320 (50.0% retracement)

Impact that the U.S. Consumer 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)
JUL 2013	07/30/2013 14:00 GMT	81.3	80.3	-16	-7

July 2013 U.S. Consumer Confidence



U.S. household sentiment fell back from a five-year high, with the Conference Board’s survey narrowing to 80.3 from a revised 82.1 in June, but the recent weakness is likely to be short-lived as the economic recovery is expected to gradually gather pace in the second-half of the year. Despite the weaker-than-expected print, the initial reaction was short-lived as the headline figure marked the second-highest reading since January 2008, but we saw the greenback consolidate throughout the North American trade as the pair ended the day at 1.3261.

--- Written by David Song, Currency Analyst


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Trading the News: German Unemployment Change
A third consecutive decline in German Unemployment may heighten the appeal of the Euro as it dampens the scope of seeing the European Central Bank (ECB) further embark on its easing cycle.

What’s Expected:
Time of release: 08/29/20137:55 GMT, 3:55 EDT
Primary Pair Impact: EURUSD
Expected: -5K
Previous: -7K
DailyFX Forecast:-10K to 5K

Why Is This Event Important:

Indeed, the ongoing improvement in Europe’s largest economy may prompt the ECB to retain its current policy at the September 5 meeting, and President Mario Draghi may sound more upbeat this time around as the central bank retains its call of seeing the euro-area returning to growth later this year.

Expectations: Bullish Argument/Scenario

Release	Expected	Actual
IFO – Business Climate (AUG)	107.0	107.5
Gross Domestic Product s.a. (QoQ) (2Q P)	0.6%	0.7%
Trade Balance (JUN)	15.0B	16.9B

The labor report may show a further decline in Germany unemployment amid the rise in business confidence along with the pickup in global trade, and a marked improvement in the labor market may produce fresh monthly highs in the EURUSD as market participants scale back bets of seeing another rate cut from the ECB.

Risk: Bearish Argument/Scenario

Release	Expected	Actual
Retail Sales (MoM) (JUN)	0.2%	-1.5%
Labor Costs s.a. (QoQ) (1Q)	--	1.1%

Nevertheless, the persistent slack in the real economy may continue to drag on hiring, and an unexpected rise in unemployment may produce a sharp selloff in the Euro as it raises the risk of seeing a prolonged recession in the monetary union.

How To Trade This Event Risk

Bullish EUR Trade: German Unemployment contracts 5K or greater

• Need green, five-minute candle after the print to consider a long EURUSD position
• If the reaction favors a buy, establish long entry with two position
• Place stop at the near-by swing low/reasonable distance from cost; at least 1:1 risk-to-reward
• Set stop to breakeven on remaining position once initial target is met; set reasonable limit

Bearish EUR Trade: Labor data misses market expectations

• Need red, five-minute candle following the report to look at a short EURUSD trade
• Implement same game plan as the bearish USD trade, just in opposite direction

Potential Price Targets For The Release

• Continues to carve near-term top; looking for close below 1.3340 (61.8% Fib retracement)
• Bearish divergence in the Relative Strength Index highlights further weakness
• Soft resistance/pivot: 1.3450; string of Fib retracements at 1.3500-10
• Interim support: 1.3320 (50.0% retracement) to 1.3240 (78.6% expansion)

Impact that the change in German Unemployment has had on EUR during the last month

Period	Data Released	Estimate	Actual	Pips Change (1 Hour post event )	Pips Change (End of Day post event)
JUL 2013	07/31/2013 7:55 GMT	0K	-7K	+12	+24

July 2013German Unemployment Change



Unemployment in Germany slipped another 7K following the 13K decline in June, while the jobless rate held steady at 6.8% for the third consecutive month in July. The unexpected improvement in the labor market propped up the Euro, with the EURUSD climbing above the 1.3280 region, and the single currency continued to gain ground throughout the day as the pair closed at 1.3300.

--- Written by David Song, Currency Analyst

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Trading the News: Canada Gross Domestic Product
The slowing recovery in Canada may prompt a further selloff in the Canadian dollar as it dampens the Bank of Canada’s (BoC) scope to normalize monetary policy.

What’s Expected:
Time of release: 08/30/2012 12:30 GMT, 8:30 EDT
Primary Pair Impact: USDCAD
Expected: 1.6%
Previous: 2.5%
DailyFX Forecast: 1.2% to 1.8%

Why Is This Event Important:

Indeed, concerns of a more pronounced slowdown in the real economy may push BoC Governor Stephen Poloz to adopt a more dovish tone for monetary policy, and the central bank may retain its currency policy for an extended period of time in an effort to address the downside risks surrounding the region.

Expectations: Bearish Argument/Scenario

Release	Expected	Actual
Retail Sales (MoM) (JUN)	-0.4%	-0.6%
Wholesale Trade Sales (MoM) (JUN)	-0.5%	-2.8%
Net Change in Employment (JUL)	10.0K	-39.4K

The ongoing weakness in the labor market along with the slowdown in private sector consumption may produce a dismal GDP report, and the Canadian dollar may face additional headwinds over the remainder of the year should the data curb expectations for a BoC rate hike.

Risk: Bullish Argument/Scenario

Release	Expected	Actual
Existing Home Sales (MoM) (JUL)	--	0.2%
Housing Start (JUL)	190.0K	192.9K
New Housing Price Index (MoM) (JUN)	0.1%	0.2%

Nevertheless, the strength in the housing market may help to limit the scope of seeing a marked slowdown in the exchange rate, and a positive print may foster a near-term correction in the USDCAD as it raises the fundamental outlook for the Canadian dollar.

How To Trade This Event Risk

Bearish CAD Trade: 2Q GDP slows to 1.6% or lower

• Need green, five-minute candle following the release to consider buy entry on USDCAD
• If the reaction favors a long trade, enter with two position
• Place stop at the near-by swing low/reasonable distance from cost; at least 1:1 risk-to-reward
• Shift stop to entry on remaining position once initial target is hit, set reasonable limit

Bullish CAD Trade: Growth rate tops forecast

• Need red, five-minute candle to look at a short USDCAD trade
• Implement the same strategy as the bearish CAD trade, just in reverse

Potential Price Targets For The Release

• Upward trending channel calls for higher high; bullish flag formation in focus
• Soft resistance at 1.0540-50, 61.8% expansion; close above brings 78.6% Fib expansion on radar
• Relative Strength Index approaching overbought territory
• Former resistance (1.0420-30, 38.2% retracement) seen as new support

Impact that the Gross Domestic Product report has had on CAD during the last quarter

Period	Data Released	Estimate	Actual	Pips Change (1 Hour post event )	Pips Change (End of Day post event)
1Q 2013	05/31/2013 12:30 GMT	2.3%	2.5%	+12	+36

1Q 2013 Canada Gross Domestic Product



The Canadian economy grew another 2.5% in the first quarter to mark the fastest pace of growth since 2011, and the pickup in GDP may encourage the Bank of Canada to adopt a more hawkish tone for monetary policy as the central bank looks to avert an asset bubble. Despite the better-than-expected print, the initial decline in the USDCAD was short-lived, and the Canadian dollar continued to lose ground throughout the North American trade as the pair closed at 1.0364.

--- Written by David Song, Currency Analyst


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- Australia 2Q GDP to Highlight Slowing/Uneven Recovery
- Slower Growth to Drag on AUDUSD- Renew Bets for More Dovish RBA

Trading the News: Australia Gross Domestic Product

The slowing recovery in the Australian economy may prompt a further selloff in the AUDUSD as it raises the scope of seeing the Reserve Bank of Australia (RBA) introduce additional rate cuts over the near to medium-term.

What’s Expected:
Time of release: 09/04/2013 1:30 GMT, 21:30 EDT
Primary Pair Impact: AUDUSD
Expected: 0.5%
Previous: 0.6%
DailyFX Forecast:0.2% to 0.5%

Why Is This Event Important:

RBA Governor Glenn Stevens may come under increased pressure to further embark on the easing cycle amid the ongoing slack in the region, and the central bank head may continue to favor a lower exchange to help with the rebalancing of the $1T economy.

Expectations: Bearish Argument/Scenario

Release	Expected	Actual
Retail Sales (MoM) (JUL)	0.4%	0.1%
Net Exports of GDP (2Q)	0.10%	-0.04%
Employment Change (JUL)	5.0K	-10.2K

The GDP report may highlight a more protracted recovery amid the slowdown in global trade along with the ongoing weakness in real economy, and the bearish sentiment surrounding the higher-yielding currency may gather pace should the data renew bets for additional monetary support.

Risk: Bullish Argument/Scenario

Release	Expected	Actual
Building Approvals (MoM) (JUL)	4.0%	10.8%
Private Sector Credit (MoM) (JUL)	0.4%	0.4%
Home Loans (MoM) (JUN)	2.0%	2.7%

Nevertheless, record-low borrowing costs may limit the risk of seeing a pronounced slowdown in the growth rate as it encourages private-sector lending, and a positive development may prompt a more meaningful correction in the exchange rate as raises the RBA’s scope to retain its current policy.

How To Trade This Event Risk

Bearish AUD Trade: 2Q growth rate slows to 0.5% or lower

• Need to see red, five-minute candle following the report for a potential short trade on AUDUSD
• If market reaction favors a short trade, sell AUDUSD 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 breakeven on remaining position once initial target is met, set reasonable limit

Bullish AUD Trade: GDP exceeds market forecast

• Need green, five-minute candle to consider a long AUDUSD trade
• Carry out the same setup as the bearish AUD trade, just in the opposite direction

Potential Price Targets For The Release

• Bearish trend remains intact; 50-Day SMA (0.9102) lines up with trendline resistance
• RSI approaching resistance (53); break higher may bring range-bound prices
• Soft resistance: 0.9210-20 (61.8% Fib retracement)
• Soft support: 0.8990 pivot; 0.8700 (78.6% retracement) to 0.8710 (38.2% expansion)

Impact that Australia GDP has had on AUD during the last quarter

Period	Data Released	Estimate	Actual	Pips Change (1 Hour post event )	Pips Change (End of Day post event)
1Q 2013	06/05/2013 1:30 GMT	0.7%	0.6%	+8	-91

1Q 2013 Australia GDP



Australia grew an annualized 2.5% in the second-quarter to mark the slowest pace of growth since 2011, and the uneven recovery may prompt the Reserve Bank of Australia to push the benchmark interest rate to a fresh record-low in order to stem the downside risks for the $1T economy. Although the initial decline in the AUDUSD was short-lived, the Australian dollar struggled to hold its ground throughout the day as the pair closed at 0.9539.

--- Written by David Song, Currency Analyst



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- European Central Bank (ECB) to Retain Current Policy, Forward-Guidance
- ECB Has Called for Export-Led Recovery; Verbal Intervention on Tap?

Trading the News: European Central Bank Interest Rate Decision

The European Central Bank (ECB) is widely expected to keep rates on hold in the midst of a budding recovery, but a dovish twist on the central bank’s forward-guidance may spark a fresh selloff in the EURUSD as the Governing Council looks for an export led recovery.

What’s Expected:

Time of release: 09/05/2013 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:

With the ongoing theme of utilizing non-standard measures, ECB President Mario Draghi, who’s scheduled to deliver the policy statement at 12:30 GMT, may implement his own style of ‘verbal intervention’ to encourage a stronger recovery while addressing the threat for deflation. In turn, the Euro may struggle to hold its ground should the central bank show a preference for a lower exchange-rate.

Expectations: Bearish Argument/Scenario

Release	Expected	Actual
Euro-Zone Retail Sales (MoM) (JUL)	0.2%	0.1%
Euro-Zone Consumer Price Index Estimate (YoY) (AUG)	1.4%	1.3%
Euro-Zone Unemployment Rate (JUL)	12.1%	12.1%

The slowdown in private consumption along with record-high unemployment may continue to dampen the outlook for growth and inflation, leading the ECB to further employ extraordinary measures to support the fragile recovery.

Risk: Bullish Argument/Scenario

Release	Expected	Actual
Euro-Zone Gross Domestic Product s.a. (QoQ) (2Q P)	0.3%	0.3%
Euro-Zone Economic Confidence (AUG)	93.8	95.2
Euro-Zone Purchasing Manager Index- Composite (AUG A)	50.9	51.7

However, the ongoing improvements in the more forward-looking indicators may encourage the Governing Council to scale back its dovish tone for monetary policy and dampen bets for further rate cuts.

How To Trade This Event Risk

Trading the ECB interest rate decision may not be as clear cut as some of our other trade setups as the press conference with President Draghi ends with a Q&A session.

Bearish EUR Trade: ECB Adjust Forward-Guidance in Favor of Easing Cycle

• Need to see red, five-minute candle following the statement to consider a short EURUSD trade
• If market reaction favors a short trade, sell EURUSD with two separate position
• Place stop at the near-by swing high/reasonable distance from cost; look for 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: Draghi Strikes More-Neutral Tone

• Need green, five-minute candle to favor a long EURUSD trade
• Implement same strategy as the bearish euro trade, just in the opposite direction

Potential Price Targets For The Rate Decision
EURUSD Daily

• Breaks down from bullish trend; bearish divergence in Relative Strength Index
• New Resistance: 1.3220 (50.0% retracement) – 1.3240 (78.6% expansion)
• Soft Support: 1.3310 (38.2% retracement) - 1.3340 (61.8% expansion)

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)
AUG 2013	08/01/2013 11:45 GMT	0.50%	0.50%	+7	-28

August 2013 European Central Bank Interest Rate Decision



The European Central Bank retained its pledge to keep the benchmark interest rate at 0.50% ‘or lower levels for an extended period of time’ in order to encourage a stronger recovery, and went onto say that ‘developments have to be significantly better than our current baseline scenario for our outlook for price stability in order for us to change guidance’ amid the persistent slack in the real economy. Despite the rebound from the 1.3200 handle, the EURUSD struggled to hold its ground following the ECB press conference, with the pair ending the day at 1.3207.

--- Written by David Song, Currency Analyst

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- U.S. Non-Farm Payrolls to Climb 180K, Unemployment Rate to Hold at 7.4%
- Labor Force Participation Slipped to 63.4% from 63.5% in June

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

With the U.S. economy is expected to add another 180K jobs in August, a pickup in job growth may fuel another near-term rally in the dollar as it raises the Fed’s scope to taper the asset-purchase program at the September 17-18 meeting.

What’s Expected:
Time of release: 09/06/2013 12:30 GMT, 8:30 EDT
Primary Pair Impact: EURUSD
Expected: 180K
Previous: 162K
DailyFX Forecast: 160K to 200K

Why Is This Event Important:

Indeed, a strong Non-Farm Payrolls report may spur a more material shift in the policy outlook as the Fed sees a stronger recovery in the second-half of the year, and it seems as though the central bank is slowly moving away from its easing cycle as the world’s largest economy gets on a more sustainable path.

Expectations: Bullish Argument/Scenario

Release	Expected	Actual
ISM Non-Manufacturing (AUG)	55.0	58.6
ISM Manufacturing (AUG)	55.0	58.6
Gross Domestic Product (Annualized) (QoQ) (2Q P)	2.2%	2.5%

The pickup in business outputs along with the faster rate of GDP growth may encourage a larger-than-expected rise in U.S. employment, and a positive print may foster a more meaningful rally in the dollar as the Fed looks to scale back on quantitative easing.

Risk: Bearish Argument/Scenario

Release	Expected	Actual
ADP Employment Change (AUG)	184K	176K
Challenger Job Cuts (YoY) (AUG)	--	56.5%
Philadelphia Fed Business Outlook (AUG)	15.0	9.3

Nevertheless, the ongoing slack in the real economy may drag on hiring, and another weaker-than-expected print may threaten the bullish sentiment surrounding the reserve currency as the Fed takes a cautious approach in implementing its exit strategy.

How To Trade This Event Risk

Bullish USD Trade: NFPs rise 180K or more; Unemployment Rate holds steady

• Need to see red, five-minute candle following the print to consider a short trade on EURUSD
• If market reaction favors a sell trade, short EURUSD 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
• Shift stop to entry on remaining position once initial target is hit, set reasonable limit

Bearish USD Trade: Employment misses market forecast

• Need green, five-minute candle to favor a long EURUSD trade
• Implement same setup as the bearish euro trade, just in reverse

Potential Price Targets For The Release

EURUSD Daily

• Bearish divergence in Relative Strength Index favors downside targets
• Negative slope on 10 (1.3284) & 20-Day SMA (1.3295)
• Former support 1.3220 (50.0% retracement) - 1.3240 (78.6% expansion) seen as new resistance
• Interim support: 1.3110 (38.2% retracement) & 1.3060-70 (50.0% expansion)

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)
JUL 2013	08/02/2013 12:30 GMT	185K	162K	+64	+89

July 2013 U.S. Non-Farm Payrolls



U.S. Non-Farm Payrolls increased another 162K following the 188K rise in June, while the jobless rate narrowed to 7.4% from 7.6% as discouraged workers left the labor force. The dismal print dragged on the dollar, with the EURUSD climbing above the 1.3250 region, and the reserve currency continued to lose ground throughout the North American trade as the pair closed at 1.3279.

--- Written by David Song, Currency Analyst

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- U.K. Jobless Claims to Decline for Tenth-Consecutive Month
- ILO Unemployment Rate to Hold at 7.8% for Fifth Month
Trading the News: U.K. Jobless Claims Change

U.K. Jobless Claims are projected to contract another 21.0K in August and the ongoing improvement in the labor market is likely to spark fresh monthly highs in the GBPUSD as it raises the scope of seeing a stronger recovery in Britain.

What’s Expected:

Time of release: 09/11/2013 8:30 GMT, 4:30 EDT
Primary Pair Impact: GBPUSD
Expected: -21.0K
Previous: -29.2K
DailyFX Forecast: -10.0K to -25.0K

Why Is This Event Important:

With Bank of England (BoE) policy makers scheduled to testify in front of the U.K. Treasury Committee later this week, a better-than-expected employment report may encourage Governor Mark Carneytoadopt a more neutral tone for monetary policy, while a growing number of central bank officials may highlight a greater risk of seeing above-target price growth for an extended period of time as the economy gets on a firmer footing.

Expectations: Bullish Argument/Scenario

Release	Expected	Actual
NIESR GDP Estimate (AUG)	--	0.9%
Purchasing Manager Index- Services (AUG)	59.7	60.5
Purchasing Manager Index- Manufacturing (AUG)	55.0	57.2

The ongoing pickup in manufacturing and service-based activity may encourage U.K. firms to expand their labor force, and a positive development should bring our topside GBPUSD targets into as the bullish trend continues to take shape.

Risk: Bearish Argument/Scenario

Release	Expected	Actual
Trade Balance (JUL)	-1.700B	-3.085B
Halifax House Price (MoM) (AUG)	0.8%	0.4%
BBA Loans for House Purchases (JUL)	39.4K	37.2K

However, the persistent slack in the real economy may prompt businesses to scale back on hiring, and a dismal print may trigger a near-term correction as it renews speculation for additional monetary support.

How To Trade This Event Risk

Bullish GBP Trade: Jobless Claims Contracts 21.0K or More

• Need green, five-minute candle following the print to consider a long GBPUSD trade
• If reaction favors a buy trade, long GBPUSD 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: Unemployment Report Disappoints

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

Potential Price Targets For The Rate Decision
GBPUSD Daily

• Maintains bullish trend dating back to July; reinforced by Relative Strength Index
• Interim Resistance: June High (1.5750); 100% Fibonacci expansion (1.5780-90)
• Interim support: 1.5610-20 (78.6% expansion) & 1.5480-90 (61.8% expansion & 200-Day SMA)

Impact that the U.K. Jobless Claims report has had on GBP during the last release

Period	Data Released	Estimate	Actual	Pips Change (1 Hour post event )	Pips Change (End of Day post event)
JUL 2013	08/14/2013 8:30 GMT	-15.0K	-29.2K	+16	+48

July 2013 U.K. Jobless Claims Change



Unemployment claims slipped another 29.2K in July following the 29.4K decline the month prior, while the
jobless rate held steady at an annualized 7.8% for the fourth consecutive month. Indeed, the sharp decline propped up the British Pound, with the GBPUSD making a run at the 1.5500 handle, but we saw the sterling consolidate throughout the day as the pair closed at 1.5498.

--- Written by David Song, Currency Analyst

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- Reserve Bank of New Zealand to Preserve Current Policy
- RBNZ Governor Stephen Poloz to Speak at 17:05; Testimony at 21:10

Trading the News: Reserve Bank of New Zealand Interest Rate Decision

The Reserve Bank of New Zealand (RBNZ) is widely expected to keep the benchmark interest rate at 2.50%, but the fresh batch of central bank rhetoric may spark a bullish breakout in the New Zealand dollar should Governor Graeme Wheeler adopt a more hawkish tone for monetary policy.

What’s Expected:

Time of release: 09/11/2013 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:

Indeed, the central bank head may highlight a greater risk for an asset bubble as the economic recovery gathers pace, 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.

Expectations: Bullish Argument/Scenario

Release	Expected	Actual
Card Spending- Retail (MoM) (AUG)	0.6%	0.8%
QV House Prices (YoY) (AUG)	--	8.5%
REINZ House Sales (YoY) (JUL)	--	14.7%

Indeed, rising home prices along with the ongoing pickup in private sector credit may raise the risk of seeing a housing bubble, and Governor Wheeler may show a greater willingness to lift the benchmark interest rate off the record-low in order to balance the risks surrounding the region.

Risk: Bearish Argument/Scenario

Release	Expected	Actual
Manufacturing Activity Volume (QoQ) (2Q)	--	-3.4%
Trade Balance (JUL)	-16M	-774M
ANZ Business Confidence (AUG)	--	48.1

However, Mr. Wheeler may make further attempts to limit the strength in the New Zealand dollar amid the slowdown in global trade, and the central bank head may continue to employ verbal interventionto encourage a help address the trade deficit.

How To Trade This Event Risk

Bullish NZD Trade: RBNZ shows greater willingness to hike rates

• Need green, five-minute candle following a hawkish statement to consider a long NZDUSD trade
• If market reaction favors a long trade, buy NZDUSD with two separate position
• Set stop at the near-by swing low/reasonable distance from cost; look for at least 1:1 risk-to-reward
• Move stop to entry on remaining position once initial target is met, set reasonable limit

Bearish NZD Trade: Wheeler strikes dovish tone; uses verbal intervention

• Need red, five-minute candle to favor a short NZDUSD trade
• Implement same strategy as the bullish New Zealand dollar trade, just in opposite direction

Potential Price Targets For The Rate Decision
NZDUSD Daily

Daily

• Stuck in broad range dating back to June; Relative Strength Index capped by 62
• Interim resistance: 0.8100 & 81.70-80 ( 38.2% & 50.0% retracements)
• Interim support: 0.7910-20 (23.6% retracement) to 0.7970-80 (50.0% retracement)

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)
JUL 2013	07/24/2013 21:00 GMT	2.50%	2.50%	+44	+147

July 2013 Reserve Bank of New Zealand Interest Rate Decision



As expected, the Reserve Bank of New Zealand retained its current policy in July, but showed a greater willingness to start normalizing monetary policy and said that ‘the extent of the monetary policy response will depend largely on the degree to which the growing momentum in the housing market and construction sector spills over into inflation pressures’ amid the growing threat of an asset bubble. Indeed, the New Zealand dollar pushed higher following the rate decision, with the NZDUSD climbing above the 0.7975 region, and the higher-yielding currency continued to gain ground throughout the day as the pair closed at 0.8076.


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