Trading News Events

- U.S. Advance Retail Sales to Rise for Second Month
- Sales Excluding Autos to Advance for Third Straight Month

Trading the News: U.S. Advance Retail Sales

A pickup in U.S. Advance Retail Sales may encourage a more meaningful rebound in the dollar as it raises the Fed’s scope to taper the asset-purchase program at the December 17-18 meeting.

What’s Expected:

Time of release: 12/12/2013 13:30 GMT, 8:30 EST
Primary Pair Impact: EURUSD
Expected: 0.6%
Previous: 0.4%
DailyFX Forecast: 0.4% to 0.8%

Why Is This Event Important:

Key data prints highlighting a more robust recovery may heighten bets for a small taper as market participants turn their attention to the Federal Open Market Committee (FOMC) interest rate decision, and the central bank may sound more upbeat this time around following the upward revision in 3Q GDP.

Expectations: Bullish Argument/Scenario

Release	Expected	Actual
Consumer Credit (OCT)	$14.500B	$18.186B
U. of Michigan Confidence (DEC P)	76.0	82.5
Non-Farm Payrolls (NOV)	185K	203K

The recent pickup in job growth along with the rebound in household confidence may pave the way for a stronger-than-expected sales report, and a marked rise in private sector consumption should raise the outlook for the U.S. economy as it remains one of the leading drives of growth.

Risk: Bearish Argument/Scenario

Release	Expected	Actual
Personal Income (OCT)	0.3%	-0.1%
Average Hourly Earnings (YoY) (NOV)	2.0%	2.0%
Durable Goods Orders (OCT)	-2.0%	-2.0%

Nevertheless, subdued wage growth may continue to drag on household consumption amid the ongoing slack in the real economy, and the Fed may carry its highly accommodative policy stance into 2014 amid the growing threat for disinflation.

How To Trade This Event Risk

Bullish USD Trade: Retail Sales Climbs 0.6% or Greater

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

Bearish USD Trade: Household Spending Disappoints

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

Potential Price Targets For The Rate Decision
EURUSD Daily

• Ascending Channel Continues to Take Shape; Higher High on Tap?
• Break Above 70 on RSI to Provide Confirmation/Conviction
• Interim Resistance: 1.3800 Pivot to 1.3831 (2013 High)
• Interim Support: 1.3450 (50.0% expansion) to 1.3490 (50.0% retracement)

Impact that the U.S. Advance Retail Sales report 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)
OCT 2013	11/20/2013 13:30 GMT	0.1%	0.4%	-8	-27

October 2013 U.S. Advance Retail Sales



Despite the U.S. government shutdown, Adjusted Retail Sales MoM for October came in at 0.4%, beating economist estimates of 0.1% while the prior print was revised up a tenth of a percent to 0.0%. With the median age of autos in the U.S. standing at a record 11.1 years old, it is no surprise that the reading was led by new car sales. With the U.S. holiday season in full swing, economists estimate that the November print will come in at its third best for 2013 at 0.6%. Following better than expected GDP and NFPs, a strong Retail Sales print here will contribute to already strong fundamentals ahead of FOMC week.
--- Written by David Song, Currency Analyst

More...

- U.S. Durable Goods Orders to Rise for the Seventh Time in 2013
- Non-Defense Capital Goods Orders Excluding Aircrafts to Follow Suit

Trading the News: U.S. Durable Goods Orders

Demands for U.S. Durable Goods are projected to increase 2.0% in November and a strong rebound may spark a bullish reaction in the greenback as the Fed moves away from its easing cycle.

What’s Expected:

Time of release: 12/24/2013 13:30 GMT, 8:30 EST
Primary Pair Impact: EURUSD
Expected: 2.0%
Previous: -2.0%
DailyFX Forecast: 1.0% to 2.0%

Why Is This Event Important:

A marked pickup in private sector consumption may prompt the Federal Open Market Committee (FOMC) to further reduce its asset-purchase program at the January 29 meeting as the economic recovery gradually gathers pace.

Expectations: Bullish Argument/Scenario

Release	Expected	Actual
Gross Domestic Product (Annualized) (QoQ) (3Q F)	3.6%	4.1%
Advance Retail Sales (MoM) (NOV)	0.6%	0.7%
Change in Non-Farm Payrolls (NOV)	185K	203K

The resilience in household spending along with the faster rate of job growth may generate increased demands for U.S. Durable Goods, and a positive development may heighten the bullish sentiment surrounding the dollar as it raises the Fed’s scope to normalize monetary policy ahead of schedule.

Risk: Bearish Argument/Scenario

Release	Expected	Actual
Personal Income (OCT)	0.3%	-0.1%
Average Hourly Earnings (YoY) (NOV)	2.0%	2.0%
Consumer Confidence (NOV)	72.6	70.4

However, subdued wage growth paired with the downturn in consumer confidence may limit demands for large-ticket items, and a dismal print may generate a bearish reaction for the greenback as market participants weigh the outlook for monetary policy.

Potential Price Targets For The Release

EURUSD Daily

• Appears to Have Carved a Higher Low Ahead of 50-Day SMA (1.3612)
• Interim Resistance: 1.3800 (100.0 expansion) to 1.3830 (61.8 retracement)
• Interim Support: 1.3530 (61.8 expansion) to 1.3570 (23.6 retracement)

How To Trade This Event Risk

Bullish USD Trade: Orders Rebound 2.0% or Greater

• Need red, five-minute candle following the report to consider a short EURUSD trade
• If the market reaction favors a bullish dollar trade, establish short EURUSD with two position
• Set stop at the near-by swing high/reasonable distance from entry with at least 1:1 risk-to-reward
• Move stop to breakeven on remaining position once initial target is met; set reasonable limit

Bearish USD Trade: Demands Contract for Second Month

• Need green, five-minute candle following the release to look at a long EURUSD entry
• Implement same setup as the bullish USD trade, just in opposite direction

Impact that the U.S. Durable Goods Orders 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)
OCT 2013	11/27/2013 13:30 GMT	-2.0%	-2.0%	-8	-19

October 2013 U.S. Durable Goods Orders

Purchase of large-ticket items slipped 2.0% in October following a 4.2% expansion during the previous month, while Non-defense Capital Goods Orders excluding Aircrafts, a proxy for business investments, weakened 1.2% amid forecasts for a 0.8% rise. The initial bearish dollar reaction was short-lived as the EURUSD failed to hold above the 1.3600 handle, and the pair continued to consolidate throughout the day as it closed at 1.3578.

--- Written by David Song, Currency Analyst

More...

- European Central Bank (ECB) to Retain Current Policy & Forward-Guidance
- President Mario Draghi to Highlight Threat for Disinflation?

Trading the News: European Central Bank Interest Rate Decision

The European Central Bank (ECB) may help to prop up the single currency as the Governing Council is widely expected to keep the benchmark interest rate on hold while preserving its forward-guidance for monetary policy.

What’s Expected:

Time of release: 01/09/2014 12:45 GMT, 7:45 EST
Primary Pair Impact: EURUSD
Expected: 0.25%
Previous: 0.25%
Forecast: 0.25%

Why Is This Event Important:

A further delay in the ECB’s easing cycle may instill a bullish outlook for the EURUSD as President Mario Draghi retains a wait-and-see approach, but the single currency may struggle to hold its ground should the central bank head highlight a greater risk for disinflation.

Expectations: Bearish Argument/Scenario

Release	Expected	Actual
Euro-Zone Unemployment Rate (NOV)	12.1%	12.1%
Euro-Zone Consumer Price Index Core (YoY) (DEC A)	0.8%	0.7%
Euro-Zone Employment (QoQ) (3Q)	--	0.0%

The ECB may show a greater willingness to implement more non-standard measures over the near-term amid the ongoing weakness in the labor market paired with the growing threat for disinflation, and a more-dovish policy statement may drag on the single currency as President Mario Draghi retains a cautious outlook for the region.

Risk: Bullish Argument/Scenario

Release	Expected	Actual
Euro-Zone Retail Sales (MoM) (NOV)	0.1%	1.4%
Euro-Zone Trade Balance s.a. (OCT)	14.5B	14.5B
Euro-Zone Purchasing Manager Index- Composite (DEC A)	51.9	52.1

However, the ECB may adopt a more neutral tone this time around as the central bank anticipates a more meaningful recovery in 2014, and the Euro may trade on a firmer footing should the Governing Council talk down bets for additional monetary support.
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 Provides More Detailed Monetary Easing Timeline

• Need 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 Further Delay Easing Cycle

• 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

• Struggling to Hold Trendline Support; Preserves Bearish Trend from 2008
• Bearish Relative Strength Index Continues to Take Shape
• Interim Resistance: 1.3800 (100% expansion) to 1.3830 (61.8% retracement)
• Interim Support: 1.3490 (50.0% retracement) to 1.3500 Pivot

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)
DEC 2013	12/05/2013 12:45 GMT	0.25%	0.25%	-3.8	+80

December 2013 European Central Bank Interest Rate Decision

More...

- U.S. Non-Farm Payrolls to Climb 197K, Unemployment Rate to Hold at 7.0%
- NFP Exceeded Market Expectations the Last Two Consecutive Prints

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

U.S. Non-Farm Payrolls (NFP) are projected to increase another 197K in December and a better-than-expected print may heighten the bullish outlook for the dollar as it raises the Fed’s scope to further normalize monetary policy over the coming months.

What’s Expected:

Time of release: 01/10/2014 13:30 GMT, 8:30 EST
Primary Pair Impact: EURUSD
Expected: 197K
Previous: 203K
Forecast: 190K to 210K

Why Is This Event Important:

A pickup in job growth may spur a further shift in the policy outlook as the Fed starts to wind down its asset-purchase program, and the central bank may take a more aggressive approach in moving away from its easing cycle as the economic recovery gathers pace.

Expectations: Bullish Argument/Scenario

Release	Expected	Actual
ADP Employment Change (DEC)	200K	238K
ISM Non-Manufacturing (Employment) (DEC)	--	55.8
ISM Manufacturing (Employment) (DEC)	--	56.9

In light of the positive developments coming out of the U.S. economy, the data certainly raises the scope of seeing NFP top market expectations, and a strong print may spark a near-term rally in the greenback as it raises the outlook for growth.

Risk: Bearish Argument/Scenario

Release	Expected	Actual
Consumer Credit (NOV)	$14.250B	$12.318B
Domestic Vehicle Sales (DEC)	12.59M	11.65M
New Home Sales (MoM) (NOV)	-0.9%	-2.1%

However, the persistent slack in the real economy may push businesses to scale back on hiring, and a weak NFP print may trigger a more meaningful correction in the greenback as it dampens bets for another taper at the January 29 meeting.

How To Trade This Event Risk

Bullish USD Trade: NFP Rises 197K+; Unemployment Holds or Falls from 7.0%

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

Bearish USD Trade: U.S. Employment Falls Short of Market Forecast

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

Potential Price Targets For The Release

EURUSD H4

• 2008 Downward Trend Remains Intact; December Range at Risk
• Bearish Relative Strength Index Remains in Focus
• Interim Resistance: 1.3800 (100% expansion) to 1.3830 (61.8% retracement)
• Interim Support: 1.3490 (50.0% retracement) to 1.3500 Pivot

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

Period	Data Released	Estimate	Actual	Pips Change (1 Hour post event )	Pips Change (End of Day post event)
NOV 2013	12/06/2013 13:30 GMT	183K	203K	+34	+60

November 2013 U.S. Non-Farm Payrolls

Last November’s NFP beat concluded an incredible week in data out of the U.S. despite a U.S. government shutdown in October. This was leading up to the December FOMC meeting in which the Fed decided to finally taper asset purchases by $10B. Although the print came in better than estimated, the October print of 204K was revised down to 200K. Although the greenback strengthened slightly with EURUSD spiking lower, the Dollar lost strength into the end of the trading day and did not find much support against the Euro until the FOMC taper decision days later. Now with the Fed shifting policy to reduce asset purchases in 2014, continued strong employment data may push the Fed to pull back the reins on QE3 in a consistent manner. As for insight into this print, ADP Employment Change figures for December came in better than expected and contributed to Dollar strength and higher US Treasury yields.

--- Written by David Song, Currency Analyst

More...

- U.S. Consumer Price Index to Climb 1.5%- First Rise Since July
- Core Inflation to Hold at 1.7% for Fourth Consecutive Month

Trading the News: U.S. Consumer Price Index

U.S. Consumer Prices are projected to increase an annualized 1.5% in December, which would mark the first advance since July, and a pickup in price growth may encourage the Federal Open Market Committee (FOMC) to further reduce its asset-purchase program as it dampens the threat for disinflation.

What’s Expected:

Time of release: 01/16/2014 13:30 GMT, 8:30 EST
Primary Pair Impact: EURUSD
Expected: 1.5%
Previous: 1.2%
DailyFX Forecast: 1.4% to 1.6%

Why Is This Event Important:

A pickup in price growth may spur a further shift in the policy outlook as the Fed anticipates a more robust recovery in 2014, and the central bank may take a more aggressive approach in moving away from its easing cycle as the outlook for growth and inflation improves.

Expectations: Bullish Argument/Scenario

Release	Expected	Actual
Advance Retail Sales (MoM) (DEC)	0.1%	0.2%
Personal Spending (NOV)	0.5%	0.5%
Personal Consumption (3Q F)	1.4%	2.0%

U.S. firms may pass on higher costs onto consumers amid the resilience in private spending, and a marked uptick in price growth should prop up the dollar as it gives the Fed greater scope to implement a more aggressive approach in normalizing monetary policy.

Risk: Bearish Argument/Scenario

Release	Expected	Actual
Change in Non-Farm Payrolls (DEC)	197K	74K
Average Hourly Earnings (YoY) (DEC)	1.9%	1.8%
Personal Income (NOV)	0.5%	0.2%

However, subdued wage growth along with the persistent slack in the real economy may continue to drag on inflation, and a weak CPI print may generate a more meaningful correction in the greenback as it dampens bets for another $10B taper at the January 29 meeting.

How To Trade This Event Risk

Bullish USD Trade: Consumer Prices Increased 1.7% or Greater

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

Bearish USD Trade: Price Growth Remains Subdued

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

Potential Price Targets For The Release

EURUSD Daily

• String of Failed Closes Above 1.3800 Favors Downward Trend Dating Back to 2008
• RSI Highlights Further EURUSD Weakness as Bearish Divergence Takes Shape
• Interim Resistance: 1.3800 (100.0 expansion) to 1.3830 (61.8 retracement)
• Interim Support: 1.3530 (61.8 expansion) to 1.3570 (23.6 retracement)

Impact that the U.S. Consumer Price Index report has had on EUR/USD during the last month

Period	Data Released	Estimate	Actual	Pips Change (1 Hour post event )	Pips Change (End of Day post event)
NOV 2013	12/17/2013 13:30 GMT	0.1%	0.0%	-2	+19

November 2013 U.S. Consumer Price Index



The MoM December reading for CPI came in at flat at 0.0% and missed estimates of 0.1% ahead of December’s FOMC meeting. Energy prices in November put pressure on the reading as WTI Crude hit 6 month lows towards the end of the month. Despite the miss, volatility in USD pairs remained muted as market participants awaited the FOMC December Rate Decision. This CPI print will also be the last major data print out of the U.S. ahead of the FOMC next week. With current estimates pointing to a relatively impressive 0.3% MoM change, any miss here may contribute to further pressure on the greenback ahead of the Fed.

--- Written by David Song, Currency Analyst

More...

Originally Posted by TheNews

Trading the News: U.S. Consumer Price Index

Trading CPI
On the image - buy position with stop loss on breakeven :

- U.K. Retail Sales to Increase for Second Straight Month
- Household Spending Has Risen Six Times in 2013

Trading the News: U.K. Retail Sales

Household spending in the U.K. is expected to increase another 0.3% during the month of December, and a positive print may push the GBPUSD back towards the 1.6600 handle as the stronger recovery raises the Bank of England’s (BoE) scope to normalize monetary policy ahead of schedule.

What’s Expected:

Time of release: 01/17/2013 9:30 GMT, 4:30 EST
Primary Pair Impact: GBPUSD
Expected: 0.3%
Previous: 0.4%
DailyFX Forecast: 0.3% to 0.4%

Why Is This Event Important:

A pickup in private consumption may encourage BoE Governor Mark Carney to adopt a more hawkish tone for monetary policy, and the central bank may show a greater willingness to lift the benchmark interest rate later this year amid the growing threat for a housing bubble.

Expectations: Bullish Argument/Scenario

Release	Expected	Actual
Consumer Price Index (YoY) (DEC)	2.1%	2.0%
Gross Domestic Product (YoY) (3Q F)	0.8%	0.8%
Jobless Claims Change (NOV)	-35.0K	-36.7K

Easing price pressures along with the ongoing improvement in the labor market may pave the way for a strong retail sales print, and a better-than-expected result should prop up the British Pound as it raises the outlook for growth.

Risk: Bearish Argument/Scenario

Release	Expected	Actual
BRC Sales Like-for-Like (YoY) (DEC)	0.8%	0.4%
Net Consumer Credit (NOV)	0.7B	0.6B
GfK Consumer Confidence (DEC)	-11	-13

However, the weakness in household confidence paired with the recent slowdown in consumer credit may drag on spending, and a dismal development may trigger a larger correction in the sterling as market participants with the prospects for monetary policy.

Potential Price Targets For The Release
GBPUSD Daily

• Continues to Hold Key Support; RSI Retains Bullish Trend from
• Interim Resistance: 1.6550 (78.6 expansion) to 1.6600 Pivot
• Interim Support: 1.6300 Pivot to 1.6310 (50.0 expansion)

How To Trade This Event Risk

Bullish GBP Trade: Retail Sales Climbs 0.3% or Greater

• Need green, five-minute candle following the statement to favor a long GBP trade
• If reaction favors buying British Pound, long GBPUSD with two separate position
• Set stop at the near-by swing low/reasonable distance from entry; need 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 Disappoints

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

Impact that the U.K. Retail Sales 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)
NOV 2013	12/19/2013 9:30 GMT	0.3%	0.4%	-16.5	-18

November 2013 U.K. Retail Sales

Retail Sales out of the U.K. for November saw a slightly better than expected print of 0.4% as cold weather boosted demand for clothing in the retail sector. Despite the headline figure, figures for ex. and incl. auto were revised lower for October and November’s print for YoY incl. automobiles came in at 2.0% vs. 2.2% expected. The GBP/USD pair saw a slight move to the downside, but closed down just 18 pips below where it was prior to the release. Although the Pound has come under pressure as of late on weaker than expected CPI data in December, market participants will be looking for Retail Sales data that supports the general consensus of a strengthening U.K. economy. Insight into the key holiday shopping season may impact GBP crosses more than last month’s relatively muted response.

--- Written by David Song, Currency Analyst

More...

Originally Posted by TheNews

Trading the News: U.K. Retail Sales

What’s Expected:

Time of release: 01/17/2013 9:30 GMT, 4:30 EST
Primary Pair Impact: GBPUSD
Expected: 0.3%
Previous: 0.4%
Actual: 2.6%

Actual is 2.6 with 116 pips price movement :

- U.K. Jobless Claims to Decline for Fourteen-Consecutive Month
- ILO Unemployment Rate to Narrow to 7.3%- Lowest Since April 2009

Trading the News: U.K. Jobless Claims Change

U.K. jobless claims are projected to fall another 32.0K in December and the ongoing improvement in the labor market may trigger fresh highs in the GBPUSD as it raises the outlook for growth and inflation.

What’s Expected:

Time of release: 01/22/20149:30 GMT, 4:30 EST
Primary Pair Impact: GBPUSD
Expected: -32.0K
Previous: -36.7K
DailyFX Forecast: -30.0K to -35.0K

Why Is This Event Important:

Indeed, the stronger recovery in the U.K. raises the scope of seeing the Bank of England’s (BoE) 7% unemployment threshold being breached later this year, and the central bank may implement a dovish twist for its forward-guidance on monetary policy as the real economy remains far from full-capacity.

Expectations: Bullish Argument/Scenario

Release	Expected	Actual
Retail Sales ex Auto (MoM) (DEC)	0.3%	2.8%
Mortgage Approvals (NOV)	69.7K	70.8K
Purchasing Manager Index Construction (DEC)	62.0	62.1

The resilience in private sector consumption paired with the pickup in building activity may continue to generate a positive development, and a marked decline in unemployment claims may spur a higher high in the GBPUSD as it maintains the bullish trend dating back to July.

Risk: Bearish Argument/Scenario

Release	Expected	Actual
Industrial Production (MoM) (NOV)	0.4%	0.0%
Manufacturing Production (MoM) (NOV)	0.4%	0.0%
Purchasing Manager Index- Manufacturing (DEC)	58.4	57.3

However, the recent slowdown in business outputs paired with the ongoing slack in the real economy may drag on job growth, and a dismal print may spark a more meaningful correction in the British Pound as market participants scale back bets for a BoE rate hike.

How To Trade This Event Risk

Bullish GBP Trade: U.K. Jobless Claims Fall 32.0K 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: 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

• Bias Remains Bullish Above 1.6300; Looking for Higher High
• Relative Strength Index Breaks Out of Bearish Momentum
• Interim Resistance: 1.6550 (78.6 expansion) to 1.6600 Pivot
• Interim Support: 1.6300 Pivot to 1.6310 (50.0 expansion)

Period	Data Released	Estimate	Actual	Pips Change (1 Hour post event )	Pips Change (End of Day post event)
Nov 2013	12/18/2013 9:30 GMT	-36.0K	-36.7K	-17	-19

November 2013 U.K. Jobless Claims Change

Jobless Claims figures came in slightly better than expected while prior figures were revised lower from -41.7K to -42.8K thus contributing to another batch of strong data for the United Kingdom. The ILO Unemployment rate saw a drop to 7.4% vs. 7.6% prior and the Pound saw some initial chop at the release before closing relatively unchanged on the day. Since then, the GBP/USD pair has (for the most part) remained trading between 1.63 and 1.65 as further catalysts to help further Pound strength have remained on the sidelines. After a strong Retail Sales reading for December, a beat of Jobless Claims here could help further support the Pound despite a weak CPI print for last month. Note that there is additional event risk at the same time with Bank of England Minutes being released as well.

--- Written by David Song, Currency Analyst

More...

- Canada Retail Sales to Rebound 0.2% in November
- Household Spending as Increased Seven Times in 2013

Trading the News: Canada Retail Sales

A rebound in Canada Retail Sales may spark a near-term correction in the USDCAD as it raises the fundamental outlook for growth and inflation

What’s Expected:

Time of release: 01/23/2014 13:30 GMT, 8:30 EST
Primary Pair Impact: USDCAD
Expected: 0.2%
Previous: -0.1%
DailyFX Forecast: -0.1% to 0.2%

Why Is This Event Important:

In light of the recent comments from the BoC, it seems as though Governor Stephen Poloz may revert back to an easing cycle as the persistent slack in the real economy raises the threat for disinflation, and the central bank may turn increasingly dovish over the coming months should we see a further slowdown in the economic recovery..

Expectations: Bullish Argument/Scenario

Release	Expected	Actual
Manufacturing Sales (MoM) (NOV)	0.3%	1.0%
Gross Domestic Product (MoM) (OCT)	0.2%	0.3%
Consumer Price Index (YoY) (NOV)	1.0%	0.9%

Easing price pressures paired with the underlying recovery in the real economy may generate a rebound in retail sales, and a positive print should offer a more meaningful pullback in the USDCAD as it remains overbought.

Risk: Bearish Argument/Scenario

Release	Expected	Actual
Net Change in Employment (DEC)	14.1K	-45.9K
Unemployment Rate (DEC)	6.9%	7.2%
Average Weekly Earnings (YoY) (OCT)	--	1.4%

However, subdued wage growth paired with the ongoing weakness in the labor market may continue to drag on consumption, and a weaker-than-expected outcome may spur fresh lows in the Canadian dollar as it fuels expectations for a rate cut..

How To Trade This Event Risk

Bullish CAD Trade: Household Spending Rises 0.2% or More

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

Bearish CAD Trade: Private Consumption Disappoints

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

Potential Price Targets For The Release
USDCAD Daily

• Retails Long-Term Bull Trend; Looking for Higher High
• Favor ‘Buying Dips’ as Long as RSI Holds Above 70
• Interim Resistance: 1.1100 Pivot to 1.1140 (100.0% expansion)
• Interim Support: 1.0900 Pivot to 1.0930 (61.8% expansion)

Impact that the Canada Retail Sales 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)
OCT 2013	12/20/2013 13:30 GMT	0.2%	-0.1%	+34	-31

October 2013 Canada Retail Sales

Retails Sales for the month of October came three tenths below expectations to actually decline MoM by 0.1% following September’s dismal reading that marked the biggest decline since April 2010. The initial move in USDCAD higher was partially inflated by CPI data that also came in below economists’ surveys at 13:30GMT. Notably, the missed MoM figure for Retail Sales was led by a 1.9% decline in motor vehicle & parts dealers in October. Following the Bank of Canada rate decision yesterday, USDCAD saw multi-year highs intraday and spent the NY session above 1.10. Certainly, a missed print here would contribute to already dismal data out of Canada and may continue to put pressure on CAD crosses as important levels continue to be breached following a breakout against the greenback earlier this month.

--- Written by David Song, Currency Analyst

More...