Friday, August 31, 2007

Trading Signals and News Update For Friday

1. Friday, August 31st, 2007 (8:30 a.m. New York Time) CANADA
At 8:30 a.m. New York time we will have Canadian GDP coming out of Canada, and it is expected to read flat 0% versus 0.3% last month. This indicator is last indicator out of Canada before the interest rate decision next week. Everybody thinks that Canada already made up their mind what they're going to do, and most people expect them to hold next week. However, this GDP reading may affect what Canada will do in October in terms of their interest rates. I think if that comes out same as last month at 0.3%, it would prove that their economy is performing very healthy and better than everybody is expecting, and I think based on that USD/CAD may possibly go down by 40 pips or more in the first hour of the report. On the other hand, if the GDP reads -0.2 or more negative, that would be a very disappointing reading, and that would mean the Canadian economy is actually slowing down, and there may be no need for further hikes. I think based on that a reading of -0.2 or lower (more negative) may move USD/CAD up by 40 pips or more in the first hour of the report. We will have some U.S. indicators coming up at the same time such as the PCE core but from my experience they most likely will come out exactly as expected.

2. Friday, August 31st, 2007 (9:42 a.m. New York Time) USA
Then, at 9:42 a.m. New York time we will have Chicago PMI coming out of the United States. This indicator comes out at 9:42 a.m. to the special subscriber group, and all the official news services get it at 9:45. It is expected to come out around 53 versus a reading around 53.3 last month. If it reads at 50 or below, that would be very significant because that means manufacturing is actually slowing, not growing. A reading below 50 means regress, and a reading above 50 means some progress. If the reading is at 50 or below, we may possibly see GBP/USD gaining around 18, maybe 20 pips or more in the first 10 minutes of the report; however, if the reading reads 56 or higher, then we may possibly see GBP/USD going down by 20 pips or more in the first 10 minutes of the report. I say 10 minutes because we will have Bernanke speech coming out at 10 a.m. New York time. I strongly recommend that you close all of your positions from Chicago PMI before the beginning of his speech, and not right at the beginning of his speech but preferably about 5 to 7 minutes before the speech because I believe the price may move a little because of people taking profits or cutting loses. It may play in your direction or against your direction. It is up to you if you want to take 50-50% chance but I suggest you to close your position before the speech.

3. Friday, August 31st, 2007 (10:00 a.m. New York Time) USA
As I said, at 10 a.m. New York time Bernanke will be talking to some banks about the current situation with housing and the monetary policy. I highly doubt that he will say anything new. I think everybody is just on hold waiting what is going to happen with the credit (carry trades, subprime mortgage stuff), and I think he will do his regular speech of being waiting and getting ready to react, and doing whatever it needs to do in order to not negatively affect the U.S. economy. It will probably be very little move in a market based on his speech; however, remember it's Friday, 10 a.m. is the end of the London session, and we may see some interesting price action not even related to the speech, or some reaction that would be difficult to predict. Basically I am not going to trade the speech. It is difficult as it is to try to trade the speech, and also it is the end of the week and the end of the month so some traders may want to close their positions.

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Thursday, August 30, 2007

Trading News Update For Thursday.

Thursday, August 30th, 2007 (2:00 a.m. New York Time) UK
At 2 a.m. New York time we will have UK house price index coming out. It is expected to come out around 0.5%. Usually I don't trade this indicator but I think the timing for this indicator is crucial because the inflation came out very low last week or the week before, and the question is whether it's a legitimate reading or simply a byproduct of a bad weather and other seasonal things. If the housing reads 0.8 or higher, that means the inflation still probably be uncomfortably high, and I think GBP/USD may possibly gain 50 pips or more in the first hour of the report. On the other hand, if the reading is 0.2 or lower, then it would be a second lowest reading in a row after 0.1 last month, and that may mean that the inflation is indeed possibly slowing down because house prices are slowing down so GBP/USD may possibly drop 50 pips or more in the first hour of the report.

2. Thursday, August 30th, 2007 (8:30 a.m. New York Time) USA
Then at 8:30 a.m. New York time we will have U.S. GDP coming out. It's a second reading, basically a revision of the previous reading. It is expected to read at 4.1% versus 3.4%, mostly due to more data that has been gathered about exports. Don't mistake this with the GDP reading that we had last month - this is simply a revision of that reading so it has a lot weaker affect on the market. In my opinion, if the reading comes out at 4.5 or higher, we may possibly see GBP/USD going down by 40 pips or more in the first hour of the report. On the other hand, if the GDP reads at 3.7 or lower, GBP/USD may possibly gain 40 pips or more in the first hour of the report. If you trade this indicator, try to get in within the first 10 pips of the pre-release price. If you cannot get in around that price, don't chase it. Trail your stop-loss very closely because this indicator can turn around and go the opposite direction. Be careful with this one.

3. Thursday, August 30th, 2007 (2:00 a.m. New York Time) JAPAN
Then at 7:30 p.m. New York time we will have Japan CPI coming out. The most important reading will probably be Core Tokyo CPI excluding food. It is expected to read at -0.1%. If it reads -0.3% or more negative, it would surely mean that Japan probably is not going to raise rates for a while, and USD/JPY may possibly gain 50 pips or more in the first hour of the report. On the other hand, if CPI reads at 0.1% or higher, I think USD/JPY may possibly go down by 50 pips or more in the first hour of the report.

4. Thursday, August 30th, 2007 (2:00 a.m. New York Time) AUSTRALIA
Then at 9:30 p.m. New York time we will have Australian retail sales and Australian trade balance coming out. The retail sales is expected to read around 0.5%, and the trade balance is expected to read -1 billion. The retail sales is definitely the more important indicator; however, if the trade balance conflicts or doesn't conflict it would make a big difference how to trade this report. If the retails sales comes out at 0.8% or higher, and the trade balance does not conflict so comes out also better or the same as it was expected, AUD/USD may possibly go up by 30 pips or more in the first hour of the report. I would try to get in within first 10 pips on the retracement of the initial spike. However, if the trade balance conflicts, I would try to get in at the pre-release price because the price may go down very well. Use about 15 pips stop-loss, and maybe 20 pips take-profit. On the other hand, if the Australian retail sales comes out at 0.2% or lower, I think AUD/USD may possibly go down by 30 pips or more in the first hour of the report. Same situation with the trade balance: if the trade balance also comes out worse, I would try to get in within first 10 pips of the pre-release price but if the trade balance comes out conflicting meaning better-than-expected then I would try to get in at the prerelease price, short. Be very careful on this one, do not chase it. If you could not get in within 10 pips, just stay away because usually when price goes like 30 pips then it consolidates, and it is too risky to trade.

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Wednesday, August 29, 2007

Trading News Update For Wednesday and Thursday.

1. Wednesday, August 29th, 2007 (5:30 a.m. New York Time) SWITZERLAND
Actually Wednesday is pretty much dead. We have only one indicator coming out which is Swiss KOF Index at 5:30 a.m. New York time. I'm personally not going to trade it because this indicator rarely deviates from expectations, and even when it does deviate, the move is like 20 to 25 pips on USD/CHF - and if you are lucky. It is expected to come out at 2.15 versus 2.13 last month. It's a leading index of Switzerland, and it has been rising every month since January this year. If for some reason it comes out at 2.30 or higher, I think USD/CHF may possibly go down by 20 to 25 pips in the first 30 minutes of the report. If the index comes out at 2.00 or lower, I think USD/CHF may possibly go up by 20 to 25 pips in the first 30 minutes of the report. If you're trading it, I would recommend to get in within the first 5 pips of the pre-release price. If you cannot get that price, don't even try chasing it. If you will be able to get in at that price, you can squeeze maybe 10, 15 or 20 pips out of this and exit. Also exit if your target is not hit after first 30 minutes.
Thursday is going to be a very busy day.

2. Thursday, August 30th, 2007 (2:00 a.m. New York Time) UK
At 2 a.m. New York time we will have UK house price index coming out. It is expected to come out around 0.5%. Usually I don't trade this indicator but I think the timing for this indicator is crucial because the inflation came out very low last week or the week before, and the question is whether it's a legitimate reading or simply a byproduct of a bad weather and other seasonal things. If the housing reads 0.8 or higher, that means the inflation still probably be uncomfortably high, and I think GBP/USD may possibly gain 50 pips or more in the first hour of the report. On the other hand, if the reading is 0.2 or lower, then it would be a second lowest reading in a row after 0.1 last month, and that may mean that the inflation is indeed possibly slowing down because house prices are slowing down so GBP/USD may possibly drop 50 pips or more in the first hour of the report.

3. Thursday, August 30th, 2007 (8:30 a.m. New York Time) USA
Then at 8:30 a.m. New York time we will have U.S. GDP coming out. It's a second reading, basically a revision of the previous reading. It is expected to read at 4.1% versus 3.4%, mostly due to more data that has been gathered about exports. Don't mistake this with the GDP reading that we had last month - this is simply a revision of that reading so it has a lot weaker affect on the market. In my opinion, if the reading comes out at 4.5 or higher, we may possibly see GBP/USD going down by 40 pips or more in the first hour of the report. On the other hand, if the GDP reads at 3.7 or lower, GBP/USD may possibly gain 40 pips or more in the first hour of the report. If you trade this indicator, try to get in within the first 10 pips of the pre-release price. If you cannot get in around that price, don't chase it. Trail your stop-loss very closely because this indicator can turn around and go the opposite direction. Be careful with this one.

4. Thursday, August 30th, 2007 (2:00 a.m. New York Time) JAPAN
Then at 7:30 p.m. New York time we will have Japan CPI coming out. The most important reading will probably be Core Tokyo CPI excluding food. It is expected to read at -0.1%. If it reads -0.3% or more negative, it would surely mean that Japan probably is not going to raise rates for a while, and USD/JPY may possibly gain 50 pips or more in the first hour of the report. On the other hand, if CPI reads at 0.1% or higher, I think USD/JPY may possibly go down by 50 pips or more in the first hour of the report.

5. Thursday, August 30th, 2007 (2:00 a.m. New York Time) AUSTRALIA
Then at 9:30 p.m. New York time we will have Australian retail sales and Australian trade balance coming out. The retail sales is expected to read around 0.5%, and the trade balance is expected to read -1 billion. The retail sales is definitely the more important indicator; however, if the trade balance conflicts or doesn't conflict it would make a big difference how to trade this report. If the retails sales comes out at 0.8% or higher, and the trade balance does not conflict so comes out also better or the same as it was expected, AUD/USD may possibly go up by 30 pips or more in the first hour of the report. I would try to get in within first 10 pips on the retracement of the initial spike. However, if the trade balance conflicts, I would try to get in at the pre-release price because the price may go down very well. Use about 15 pips stop-loss, and maybe 20 pips take-profit. On the other hand, if the Australian retail sales comes out at 0.2% or lower, I think AUD/USD may possibly go down by 30 pips or more in the first hour of the report. Same situation with the trade balance: if the trade balance also comes out worse, I would try to get in within first 10 pips of the pre-release price but if the trade balance comes out conflicting meaning better-than-expected then I would try to get in at the prerelease price, short. Be very careful on this one, do not chase it. If you could not get in within 10 pips, just stay away because usually when price goes like 30 pips then it consolidates, and it is too risky to trade.

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