Trading News Events

- U.K. Jobless Claims to Decline for Eleven-Consecutive Month
- ILO Unemployment Rate to Hold at 7.7% for Second Month

Trading the News: U.K. Jobless Claims Change

Unemployment claims are expected to contract another 25.0K in September, and a positive development may trigger a near-term rally in the GBPUSD as it raises the outlook for growth and inflation.

What’s Expected:
Time of release: 10/16/2013 8:30 GMT, 4:30 EDT
Primary Pair Impact: GBPUSD
Expected: -25.0K
Previous: -32.6K
DailyFX Forecast: -15.0K to -30.0K

Why Is This Event Important:

Indeed, the stronger recovery in the U.K. raises the risk of seeing the Bank of England (BoE) implement its exit strategy ahead of schedule, and the sterling may continue to outperform against its major counterparts amid the material shift in the policy outlook.

Expectations: Bullish Argument/Scenario

Release	Expected	Actual
Construction Output s.a. (YoY) (AUG)	3.9%	4.0%
NIESR GDP Estimate (SEP)	--	0.8%
Mortgage Approvals (AUG)	61.5K	62.2K

The ongoing expansion in private sector credit along with the budding recovery the housing market may prompt a further decline in unemployment, and a better-than-expected print may ultimately prompt a more meaningful move at the 1.6300 handle as the BoE retains a 7% unemployment threshold for its forward-guidance.

Risk: Bearish Argument/Scenario

Release	Expected	Actual
Trade Balance (AUG)	-2.050B	-3.320B
Manufacturing Production (MoM) (AUG)	0.4%	-1.2%
Purchasing Manager Index- Manufacturing (SEP)	57.5	56.7

However, the recent lull in business outputs paired with the weakness in global trade may drag on the labor market, and the sterling may struggle to retain the range-bound price action from earlier this month should the employment report disappoint.

How To Trade This Event Risk

Bullish GBP Trade: Jobless Claims Contracts 25.0K 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

• Threatening Trending Resistance Amid Range-Bound Prices
• Relative Strength Index Breaks Out of Bearish Momentum
• Interim Resistance: 1.6300 Pivot (2012 highs)
• Interim Support: 1.5900-10 (78.6% Fibonacci expansion)

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	09/11/2013 8:30 GMT	-21.0K	-32.6K	+11	+56

July 2013 U.K. Jobless Claims Change



U.K. Jobless Claims slipped another 32.6K in July following a 36.3K contraction the month prior, while the ILO Unemployment Rate unexpectedly slipped to 7..7% from 7.8% to mark the lowest reading since November 2012. The better-than-expected print propped up the British Pound, with the GBPUS climbing above the 1.5800 handle, and the sterling continued to appreciate during the North American trade as the pair closed at 1.5816.

--- Written by David Song, Currency Analyst

More...

- U.K. Retail Sales to Rebound 0.4% in September
- 0.9% Decline in August Marked the Largest Decline in 2013

Trading the News: U.K. Retail Sales

U.K. Retail Sales are expected to increase 0.4% in September, and a marked rebound in private sector consumption should heighten the appeal of the British Pound as it raises the scope for a stronger recovery in Britain.

What’s Expected:

Time of release: 10/16/2013 8:30 GMT, 4:30 EDT
Primary Pair Impact: GBPUSD
Expected: 0.4%
Previous: -0.9%
DailyFX Forecast: -0.2% to 0.5%

Why Is This Event Important:

A pickup in household spending may encourage the Bank of England (BoE) to adopt a more hawkish tone for monetary policy, and the central bank may show a greater willingness to implement its exit strategy ahead of schedule in an effort to achieve the 2% target for inflation.

Expectations: Bullish Argument/Scenario

Release	Expected	Actual
Jobless Claims Change (SEP)	-25.0K	-41.7K
Net Consumer Credit (AUG)	0.6B	0.6B
GfK Consumer Confidence (SEP)	-11	-10

The ongoing improvement in the labor market along with the expansion in consumer credit may prompt a better-than-expected sales report, and we may see the BoE take a more stern approach in achieve the inflation target as sticky price growth continues to sap purchasing power for U.K. households.

Risk: Bearish Argument/Scenario

Release	Expected	Actual
Average Weekly Earnings ex Bonus (3MoY) (AUG)	1.0%	0.8%
Consumer Price Index (YoY) (SEP)	2.6%	2.7%
CBI Trends Selling Price (SEP)	2	3

However, subdued wage growth paired with sticky inflation may spark a further decline in consumer spending, and the Monetary Policy Committee 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

Bullish GBP Trade: Retail Sales Climbs 0.4% or Greater

• Need green, five-minute candle following the release to consider a bullish GBPUSD trade
• If reaction favors a buy trade, long British Pound 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 hit, set reasonable limit

Bearish GBP Trade: Household Spending Contracts for Second Month

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

Potential Price Targets For The Release

GBPUSD Daily

• Close Above 1.5900-10 (78.6% expansion) Offers Constructive View
• Relative Strength Index Holds 50 Mark Following Bullish Break
• Interim Resistance: 1.6300 Pivot (2012 highs)
• Interim Support: 1.5900-10 (78.6% Fibonacci expansion)

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)
AUG 2013	09/19/2013 8:30 GMT	0.4%	-0.9%	-37	-82

August 2013 U.K. Retail Sales



Retail spending in the U.K. unexpectedly slipped 0.9% in September following a 1.2% rise the month prior, which was largely driven by a 1.6% decline in Household Goods Stores sales. The dismal print triggered a selloff in the British Pound, with the GBPUSD slipping below the 1.6100 handle, and the sterling weakened further throughout the North American trade as the pair closed at 1.6029.

--- Written by David Song, Currency Analyst

More...

- China 3Q Gross Domestic Product (GDP) to Show Faster Growth
- 7.8% GDP Would Mark the Highest Print for 2013

Trading the News: China Gross Domestic Product

The near-term rally in the Australian dollar may gather pace over the next 24-hours of trading as China – Australia’s largest trading partner – is expected to expand at a faster pace in the third-quarter.

What’s Expected:

Time of release: 10/18/2013 2:00 GMT, 22:00 EDT
Primary Pair Impact: AUDUSD
Expected: 7.8%
Previous: 7.5%
DailyFX Forecast: 7.5% to 7.8%

Why Is This Event Important:

A pickup in the Chinese economy may encourage the Reserve Bank of Australia (RBA) to retain its wait-and-see approach throughout the remainder of the year, and the near-term correction in the AUDUSD may turn into a more meaningful reversal as the central bank appears to be moving away from its easing cycle.

Expectations: Bearish Argument/Scenario

Release	Expected	Actual
Foreign Direct Investment (YoY) (SEP)	5.7%	4.9%
Trade Balance (SEP)	$26.25B	$15.21B
Purchasing Manager Index- Manufacturing (SEP)	51.6	51.1

The 3Q GDP print may fall short of market expectations as the new government moves away from the export-drive market to a more consumer-based economy, and a dismal development may renew bets for more RBA rate cuts amid the rebalancing of the $1T economy.

Risk: Bullish Argument/Scenario

Release	Expected	Actual
New Yuan Loans (SEP)	675.0B	787.0B
Retail Sales (YoY) (AUG)	13.3%	13.4%
Industrial Production (YoY) (AUG)	9.9%	10.4%

However, the ongoing expansion in private sector credit along with the pickup in business outputs may generate a strong GDP print, and a positive release may heighten the more recent bullish sentiment surrounding the AUDUSD as market participants scale back bets for lower borrowing costs.

How To Trade This Event Risk

Bearish AUD Trade: China 3Q GDP Disappoints

• Need red, five-minute candle following the report to consider a bearish Australian dollar trade
• If market reaction favors a sell trade, short 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 hit, set reasonable limit

Bullish AUD Trade: Growth Rate Climbs 7.8% or Greater

• Need green, five-minute candle to look at a long AUDUSD trade
• Implement same setup as the bearish Australian dollar trade, just in opposite direction

Potential Price Targets For The Release

AUDUSD Daily

• Bullish Channel Takes Shape Following Double-Bottom
• Relative Strength Index Maintains Upward Trend From May
• Interim Resistance: 0.9670 (61.8% expansion) to 0.9715 (50.0% retracement)
• Interim Support: 0.9250 (23.6% retracement) to 0.9290 Pivot

Impact that China 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)
2Q 2013	07/15/2013 02:00 GMT	7.5%	7.5%	-13	-8

2Q 2013 China Gross Domestic Product



China slowed during the second-quarter, with GDP climbing 7.5% versus the 7.7% rate of growth seen during the three-months through June, and the region continues to face a risk for a ‘hard-landing’ amid the threat of an asset-bubble. Despite the in-line print, the slower rate of growth dragged on the Australia dollar, with the AUDUSD slipping back below the 0.9100 handle, and the pair remained rather weak throughout the day as the pair closed at 0.9096.

--- Written by David Song, Currency Analyst

More...

- U.S. Non-Farm Payrolls to Climb 180K, Unemployment Rate to Hold at 7.3%
- Labor Force Participation Slipped to 63.2% from 63.4% in July (Lowest Since 1978)

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

With U.S. Non-Farm Payrolls expected to increase another 180K in September, a pickup in job growth may fuel a more meaningful rebound in the dollar as it highlights an improved outlook for the world’s largest economy.

What’s Expected:

Time of release: 10/22/2013 12:30 GMT, 8:30 EDT
Primary Pair Impact: EURUSD
Expected: 180K
Previous: 169K
DailyFX Forecast: 160K to 200K

Why Is This Event Important:

Indeed, an upbeat employment report may heighten the appeal of the dollar as the Fed largely retains the taper timeline laid out by Chairman Ben Bernanke, but we may see the FOMC further delay its exit strategy should the data highlight a slowing recovery.

Expectations: Bullish Argument/Scenario

Release	Expected	Actual
Consumer Credit (AUG)	$12.000B	$13.625B
Personal Spending (AUG)	0.3%	0.3%
Durable Goods Orders (AUG)	-0.2%	0.1%

The resilience in private consumption along with the ongoing expansion in consumer credit may help to boost hiring, and a positive development may spark a bullish reaction in the dollar as it raises the outlook for growth.

Risk: Bearish Argument/Scenario

Release	Expected	Actual
ISM Non-Manufacturing (Employment) (SEP)	--	52.7
Challenger Job Cuts (YoY) (SEP)	--	19.1%
ADP Employment Change (SEP)	180K	166K

Nevertheless, the persistent slack in the real economy may weigh on the labor market, and we may see the Fed carry its highly accommodative policy stance into the following year in an effort to encourage a stronger recovery.

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 Report Misses Market Expectations

• 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

• Maintains Bullish Channel From July; Bearish RSI Divergence?
• Interim Resistance: 1.3740 (61.8% expansion) to 1.3760 (1.618% expansion)
• Interim Support: 1.3450 (50.0% expansion) to 1.3490 (50.0% retracement)

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)
AUG 2013	09/06/2013 12:30 GMT	180K	169K	+33	+65

August 2013 U.S. Non-Farm Payrolls



The U.S. economy added another 169K jobs in August, with the jobless rate narrowing to 7.3% from 7.4% the month prior, but the drop in unemployment was largely due to discouraged workers leaving the labor force as the participation rate slipped to 63.2% from 63.4% during the same period. The dollar struggled to hold its ground following the dismal results, with the EURUSD climbing above the 1.3150 region, and the greenback continued to track lower during the North American trade as the pair closed at 1.3175.

--- Written by David Song, Currency Analyst

More...

- Australia Consumer Price Index (CPI) to Slow for Second Straight Quarter
- 1.8% Inflation Would Mark the Lowest Reading Since 2Q 2012

Trading the News: Australia Consumer Price Index

A further decline in Australia’s Consumer Price Index may trigger a more meaningful correction in the AUDUSD as the slowing recovery raises the risk of seeing lower borrowing costs in the $1T economy.

What’s Expected:
Time of release: 10/23/2013 0:30 GMT, 20:30 EDT
Primary Pair Impact: AUDUSD
Expected: 1.8%
Previous: 2.4.%
DailyFX Forecast:1.6% to 1.8%

Why Is This Event Important:

Indeed, the Reserve Bank of Australia (RBA) may sounds more dovish at the November 4 meeting should inflation continue to undershoot, and Governor Glenn Stevens may show a greater willingness to implement additional rate cuts in order to further assist with the rebalancing of the real economy.

Expectations: Bearish Argument/Scenario

Release	Expected	Actual
Employment Change (SEP)	15.0K	9.1K
Westpac Consumer Confidence s.a. (MoM) (OCT)	--	-2.1%
Producer Price Index (YoY) (2Q)	--	1.2%

Easing input prices paired with the persistent slack in the real economy may prompt businesses to conduct heavy discounts as a means to draw increased demands, and a marked slowdown in price growth may halt the AUDUSD rally as it renews bets for additional monetary support.

Risk: Bullish Argument/Scenario

Release	Expected	Actual
NAB Business Confidence (3Q)	--	3
Consumer Inflation Expectation (OCT)	--	2.0%
Retail Sales (MoM) (AUG)	0.3%	0.4%

Nevertheless, we may see an unexpected pickup in the CPI amid the rebound in private sector consumption, and a faster rate of inflation may spur fresh monthly highs in the Australian dollar as it gives the RBA greater scope to move away from its easing cycle.

How To Trade This Event Risk

Bearish AUD Trade: CPI Narrows to 1.8% or Lower

• Need red, five-minute candle following the report to consider a bearish Australian dollar trade
• If market reaction favors a sell trade, short 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 hit, set reasonable limit

Bullish AUD Trade: Inflation Tops Market Expectations

• Need green, five-minute candle to look at a long AUDUSD trade
• Implement same setup as the bearish Australian dollar trade, just in opposite direction

Potential Price Targets For The Release

AUDUSD Daily

• Carving Higher High; Eyes 200-Day SMA (0.9752) for First Time Since April
• Relative Strength Index Resistance (79) in Focus
• Interim Resistance: 0.9770 (61.8 expansion) to 0.9800 Pivot
• Interim Support: 0.9500 (38.2 retracement) to 0.9520 (38.2 expansion)

Impact that Australia CPI 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)
2Q 2013	07/24/2013 1:30 GMT	2.5%	2.4%	-15	-111

2Q 2013 Australia Consumer Price Index



Consumer prices grew an annualized 2.4% during the three-months through June following the 2.5% advance in the first quarter, while the core rate of inflation crossed the wires at 2.2% versus expectations for a 2.1% print. Despite the choppy market reaction immediately following the release, the Australian dollar struggled to hold its ground following the CPI report, with the AUDUSD slipping below the 0.9250 region, and the higher-yielding currency weakened further throughout the day as the pair closed at 0.9165.

--- Written by David Song, Currency Analyst

More...

- U.K. GDP to Expand for Third Straight Quarter
- 0.8% Growth Rate to Mark Highest Print Since 2Q 2010

Trading the News: U.K. Gross Domestic Product

The U.K. economy is expected to expand another 0.8% in the third-quarter, and a faster rate of growth may spark fresh monthly highs in the British Pound amid the shift in the policy outlook.

What’s Expected:

Time of release: 10/25/2013 8:30 GMT, 4:30 EDT
Primary Pair Impact: GBPUSD
Expected: 0.8%
Previous: 0.7%
DailyFX Forecast: 0.7% to 0.9%
Why Is This Event Important:

Indeed, there’s growing speculation that the Bank of England (BoE) will normalize monetary policy ahead of schedule amid the stronger-than-expected recovery in the U.K., and an upbeat GDP report may encourage the central bank to adopt a more hawkish tone at the November 7 meeting as the outlook for growth and inflation picks up.

Expectations: Bullish Argument/Scenario

Release	Expected	Actual
Retail Sales inc Auto (MoM) (SEP)	0.4%	0.6%
Jobless Claims Change (SEP)	-25.0K	-41.7K
Mortgage Approvals (AUG)	61.5K	62.2K

The larger-than-expected decline in unemployment along with the rise in private sector consumption may prompt an upbeat GDP report, and a faster rate of growth may heighten the bullish sentiment surrounding the sterling as the BoE moves away from its easing cycle.

Risk: Bearish Argument/Scenario

Release	Expected	Actual
Trade Balance (AUG)	2.6%	2.7%
Industrial Production (MoM) (AUG)	0.4%	-1.1%
Manufacturing Production (MoM) (AUG)	0.4%	-1.2%

However, the deterioration in global trade paired with the slowdown in business outputs may limit the scope of seeing a strong GDP print, and a dismal result may spark a more meaningful correction in the GBPUSD as the pair continues to hold below key resistance.

How To Trade This Event Risk

Bullish GBP Trade: 3Q GDP Expands 0.8% or Greater

• 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: U.K. Growth Rate Disappoints

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

Potential Price Targets For The Release

GBPUSD Daily

• Retains Weekly Range Ahead of 3Q GDP; Maintains Upward Trend Since July
• Relative Strength Index Threatening Bearish Momentum
• Interim Resistance: 1.6300 Pivot (2012 highs)
• Interim Support: 1.5900-10 (78.6% Fibonacci expansion)

Impact that the U.K. GDP 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)
2Q 2013	07/25/2013 8:30 GMT	0.6%	0.6%	-85	+19

2Q 2013 U.K. Gross Domestic Product


U.K. GDP increased another 0.6% in the second-quarter after climbing 0.3% during the first three-months of the year, and it seems as though a British economy is getting on a more sustainable path as it skirts a triple-dip recession. Despite the in-line print, the bearish reaction in the GBPUSD pushed the exchange rate below the 1.5300 handle, but the sterling regained its footing during the North American trade to end the day at 1.5387.

--- Written by David Song, Currency Analyst

More...

- U.S. ISM Manufacturing to Narrow for First Time Since May
- ISM Manufacturing Increased for the Last Four Prints

Trading the News: U.S. ISM Manufacturing

A slowdown in the ISM Manufacturing survey may undermine the rebound in the U.S. dollar as it highlights a slowing recovery in the world’s largest economy.

What’s Expected:

Time of release: 11/01/2013 14:00 GMT, 10:00 EDT
Primary Pair Impact: EURUSD
Expected: 55.0
Previous: 56.2
Forecast: 53.0 to 58.0

Why Is This Event Important:

Data prints coming out ahead of the Fed’s December 17-18 meeting may continue to skew the policy outlook as the central bank pledges to ‘closely monitor incoming information on economic and financial developments,’ and we may see the Federal Open Market Committee (FOMC) ultimately carry its highly accommodative policy stance into 2014 to further combat the downside risks for growth and inflation.

Expectations: Bearish Argument/Scenario

Release	Expected	Actual
Dallas Fed Manufacturing Activity Survey (OCT)	10.0	3.6
Change in Non-Farm Payrolls (SEP)	180K	148K
Empire Manufacturing (OCT)	7.00	1.52

The persistent slack in the real economy may prompt businesses to scale back on production, and a marked decline in the ISM survey may encourage the FOMC to further delay its exit strategy in an effort to encourage a stronger recovery.

Risk: Bullish Argument/Scenario

Release	Expected	Actual
Industrial Production (MoM) (SEP)	0.4%	0.6%
Durable Goods Orders (SEP)	2.3%	3.7%
Wholesale Trade Sales (MoM) (AUG)	0.3%	0.6%

Nevertheless, firms may increase their outputs amid the elasticity in private sector consumption, and a positive print may foster a more meaningful rebound in the dollar as market participants weigh the outlook for monetary policy.

How To Trade This Event Risk

Bearish USD Trade: ISM Manufacturing Narrows to 55.0 or Lower

• Need to see green, five-minute candle following the print to consider a short dollar trade
• If market reaction favors a sell trade, buy EURUSD with two separate position
• Set stop at the near-by swing low/reasonable distance from entry; look for at least 1:1 risk-to-reward
• Shift stop to entry on remaining position once initial target is hit, set reasonable limit

Bullish USD Trade: Business Outputs Expand at Faster Pace

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

Potential Price Targets For The Release
EURUSD Daily

• Carves Higher High; Retains Bullish Trend From July
• Bullish Relative Strength Index Momentum Falters
• Interim Resistance: 1.3830 (61.8 retracement)
• Interim Support: 1.3490 (50.0 retracement) to 1.3455 (50.0 expansion)

Impact that the U.S. ISM Manufacturing 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)
SEP 2013	10/01/2013 14:00 GMT	55.0	56.2	-6	-10

September 2013 U.S. ISM Manufacturing


The ISM Manufacturing survey unexpectedly increased to 56.2 from 55.7 in August, with the employment component advancing to 55.4 from 53.3 to mark the highest reading for 2013. Despite the choppy reaction, the dollar edged higher throughout the North American trade, with the EURUSD ending the day at 1.3524.

--- Written by David Song, Currency Analyst

More...

- European Central Bank (ECB) to Hold at 0.50%; Forward-Guidance in Focus
- President Mario Draghi Under Pressure to Weaken Euro- Verbal Intervention?

Trading the News: European Central Bank Interest Rate Decision

The European Central Bank (ECB) is widely expected to retain its current policy in November, but the Governing Council may show a greater willingness to further embark on its easing cycle amid the growth threat for deflation.

What’s Expected:

Time of release:11/07/2013 12:45 GMT, 7:45 EST
Primary Pair Impact: EURUSD
Expected: 0.50%
Previous: 0.50%
Forecast: 0.50%

Why Is This Event Important:

Indeed, there’s growing bets that the ECB will deliver another rate before the end of the year, but we may see President Mario Draghi implement his own style of ‘verbal intervention’ as European policy makers look for a weaker Euro exchange rate.

Expectations: Bearish Argument/Scenario

Release	Expected	Actual
Euro-Zone Producer Prices (YoY) (SEP)	-0.8%	-0.9%
Euro-Zone Consumer Price Index (YoY) (OCT A)	1.1%	0.7%
Euro-Zone Unemployment Rate (SEP)	12.0%	12.2%

The ECB may have little choice but to implement more non-standard measures as inflation continues to undershoot the 2% target, and the central bank may also look to weaken the single currency in an effort to combat the threat for deflation.

Risk: Bullish Argument/Scenario

Release	Expected	Actual
Euro-Zone Sentix Investor Confidence (NOV)	6.2	9.3
Euro-Zone Trade Balance s.a. (AUG)	11.8B	12.3B
Euro-Zone Retail Sales (MoM) (AUG)	0.2%	0.7%

However, the ECB may preserve its wait-and-see approach amid the bright signs coming out of the economy, and the policy meeting may spur a longer-term rally in the Euro should the central bank talk down bets for more easing.

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 Sees Need for More Monetary Stimulus

• Need to see red, five-minute candle following the decision/statement to consider a short Euro trade
• If market reaction favors a short trade, sell EURUSD with two separate position
• Set stop at the near-by swing high/reasonable distance from cost; 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 to Remain on Sideline

• 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

• Retains Bullish Trend; Continues to Close Above Support
• Relative Strength Index Turns Around Ahead of 37
• Interim Resistance: 1.3530-40 (61.8 retracement)
• Interim Support: 1.3455 (50.0 expansion) to 1.3490 (50.0 retracement)

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)
OCT 2013	10/02/2013 11:45 GMT	0.50%	0.50%	+55	+65

October 2013 European Central Bank Interest Rate Decision



The European Central Bank stuck to its current policy in October, with President Mario Draghi reiterating that inflation expectations remain ‘firmly anchored,’ but the central bank retained its forward-guidance for monetary policy and pledged to keep rates at present or lower for an extended period of time. Despite the dovish comments, the ECB’s wait-and-see approach propped up the Euro, with the EURUSD climbing above 1.3600 handle, but we saw the single currency consolidate going into the close as the pair ended the day at 1.3578.

--- Written by David Song, Currency Analyst

More...

- U.S. Economy to Grow at Slower Pace in 3Q 2012
- GDP to Slow for First Time Since 4Q 2012

Trading the News: U.S. Gross Domestic Product (GDP)

A slowdown in the U.S. economy may trigger a new round of dollar weakness as it raises the Fed’s scope to further delay the exit strategy.

What’s Expected:
Time of release: 11/07/2013 13:30 GMT, 8:30 EST
Primary Pair Impact: USDJPY
Expected: 2.0%
Previous: 2.5%
Forecast: 2.0% to 2.5%

Why Is This Event Important:

Fears of a slowing recovery may encourage the Federal Open Market Committee (FOMC) to carry its highly accommodative policy stance into 2014, and the greenback remains at risk of facing additional headwinds over near-term as the fiscal drag continues to dampen the outlook for growth.

Expectations: Bearish Argument/Scenario

Release	Expected	Actual
Consumer Confidence (OCT)	75.0	71.2
Change in Non-Farm Payrolls (SEP)	180K	148K
NAHB Housing Market Index (OCT)	57	55

Indeed, the ongoing weakness in the real economy may ultimately lead to a weak GDP print, and the dollar may struggle to hold its ground ahead of Friday’s Non-Farm Payrolls print should the data undermine the taper-timeline laid out by Fed Chairman Ben Bernanke.

Risk: Bullish Argument/Scenario

Release	Expected	Actual
ISM Non-Manufacturing (OCT)	54.0	55.4
ISM Manufacturing (OCT)	55.0	56.4
Durable Goods Orders (SEP)	2.3%	3.7%

Nevertheless, the pickup in business outputs along with the elasticity in private consumption may help to limit the downside for growth, and a positive print may generate a more meaningful rebound in the reserve currency as market participants weigh the outlook for monetary policy.

How To Trade This Event Risk

Trading the U.S. 3Q GDP print may not be as clear cut as some of our other trade setups in light of the European Central Bank (ECB) Meeting

Bearish USD Trade: 3Q GDP Expands Less Than 2.0%

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

Bullish USD Trade: Growth Rate Exceeds Market Forecast

• Need green, five-minute candle to favor a long USDJPY trade
• Implement same setup as the short dollar trade, just in reverse

Potential Price Targets For The Release
USDJPY Daily

• Still Stuck in Wedge/Triangle Formation; Continues to Approach Apex
• Relative Strength Index Retains Threatening Trendline Resistance
• Interim Resistance: 99.00 Pivot to 99.20 (23.6 expansion)
• Interim Support: 96.40 (23.6 expansion) to 96.60 (50.0 expansion)

Impact that the U.S. GDP report has had on USD during the last quarter

Period	Data Released	Estimate	Actual	Pips Change (1 Hour post event )	Pips Change (End of Day post event)
2Q 2013	7/31/2013 12:30 GMT	1.0%	1.7%	+9	-25

The U.S. economy grew an annualized 1.7% during the three-months through June, with Personal Consumption increasing 1.8% during the same period, but the first-quarter print was revised down to 1.1% from 1.8%. The dollar initially tracked higher following the better-than-expected GDP report, with the USDJPY spiking above the 98.50 region, but the greenback struggled to hold its ground throughout the day as the pair closed at 97.88.

--- Written by David Song, Currency Analyst

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- U.K. Consumer Price Index(CPI)to Narrow to 2.5%- Lowest Since April
- Core Inflation to Slow for First Time Since July

Trading the News: U.K. Consumer Price Index

The headline reading for U.K. inflation is expected to narrow to an annualized 2.5% in October, and a marked slowdown may spur a more meaningful correction in the British Pound as it limits the Bank of England’s (BoE) scope to implement its exit strategy ahead of schedule.

What’s Expected:

Time of release: 11/12/2013 9:30 GMT, 4:30 EST
Primary Pair Impact: GBPUSD
Expected: 2.5%
Previous: 2.7%
DailyFX Forecast: 2.7% to 2.9%

Why Is This Event Important:

The recent trend of better-than-expected data may continue to prompt sticky price growth in the U.K., and we may see the BoE switch gears in 2014 as the central bank continues to see above-target inflation over the policy horizon.

Expectations: Bearish Argument/Scenario

Release	Expected	Actual
Gross Domestic Product (QoQ) (3Q A)	0.8%	0.8%
Retail Sales ex Auto (MoM) (SEP)	0.3%	0.7%
Jobless Claims Change (SEP)	-25.0K	-41.7K

The stronger recovery may heighten price pressures in the U.K. as the BoE retains its highly accommodative policy stance, and the threat of an asset-bubble may push the central bank to move away from its easing cycle as the economy gets on a more sustainable path.

Risk: Bullish Argument/Scenario

Release	Expected	Actual
Trade Balance (SEP)	-2.700B	-3.268B
BRC Shop Price Index (YoY) (OCT)	0.1%	-0.5%
CBI Trends Selling Prices (OCT)	4	-2

However, easing input costs along with the appreciation in the British Pound may continue to limit the upside for inflation, and a marked slowdown in the CPI may trigger a more meaningful correction in the GBPUSD as it provides the BoE with more room to retain its highly accommodative policy stance.

How To Trade This Event Risk

Bearish GBP Trade: U.K. CPI Narrows to 2.5% or Lower

• Need red, five-minute candle following the print to consider a short British Pound trade
• If reaction favors a sell trade, short GBPUSD with two separate position
• Set stop at the near-by swing high/reasonable distance from entry; look for at least 1:1 risk-to-reward
• Move stop to entry on remaining position once initial target is hit, set reasonable limit

Bullish GBP Trade: Inflation Tops Market Expectations

• Need green, five-minute candle to favor a long GBPUSD trade
• Implement same setup as the bearish British Pound trade, just in the opposite direction

Potential Price Targets For The Release

• Retains Range-Bound Price Action From September
• Relative Strength Index Preserves Bearish Momentum
• Interim Resistance: 1.6250 Pivot to 1.6300 Pivot (2012 highs)
• Interim Support: 1.5900 Pivot to 1.5910 (78.6% Fibonacci expansion)

Impact that the U.K. CPI 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)
SEP 2013	10/15/2013 8:30 GMT	2.6%	2.7%	-53	+6

September 2013 U.K. Consumer Price Index

U.K. consumer prices increased 2.7% for the second consecutive month in September, while the core rate of inflation unexpectedly advanced 2.2% during the same period amid forecasts for a 2.0% clip. Despite the stronger-than-expected print, the British Pound struggled to maintain the initial bounce following the print, with the GBPUSD slipping below the 1.5950 region, but the sterling regained its footing to end the day at 1.5995.

--- Written by David Song, Currency Analyst

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