Trading Signals and News Update For Wednesday

In previous email we talked about a couple of indicators. On Monday we were talking about the UK manufacturing PMI, Australian GDP, and on Tuesday were talking about Swiss GDP, US ISM manufacturing, and interest rates statement out of Australia.

UK manufacturing PMI did not hit my trigger but I also told you that probably the best to do would be not trading that indicator because this one has not been performing too well recently. It seems the market does not care about it, and this is exactly what happened. It deviated but not hit my trigger, and it did absolutely nothing. Skipping it was a very wise decision.

Then on Monday at 9:30 p.m. New York time we had Australian GDP. It came out at 0.9%, and I told you that if it comes out at 0.9% or higher, it would be a possible buy on AUD/USD, good for at least 40 pips in the first hour of the report. As you could see, it spiked from 8206 to approximately 8253 so it was almost 50 pips. The spike was very quick, then it very quickly traced, and then it continued going up. In the first hour it hit 47 pips target. If you made money on this, I am very happy for you. If you did not get in on the initial spike, it probably was a very difficult to trade because the retracement came extremely fast so probably if you had a limit order submitted around 8225 or better, you would have been filled; however, under normal circumstances this is a twice bigger spike than it usually is, and this was a little bit out of the ordinary move. If you played conservatively and missed this move, don't worry about it.

On Tuesday the Swiss GDP came out exactly as expected, nothing to talk about.
ISM manufacturing came out also pretty much exactly as expected, that also was a no trade. Same with Australia as they kept the rate unchanged.

Let's talk about tomorrow, Wednesday.

Tomorrow we have a few things happening.

1. Wednesday, September 5th, 2007 (4:30 a.m. New York Time) UK
At 4:30 a.m. we will have UK services PMI coming out. This one will be a very interesting one. I think it is going to move the market more than usual because we have a very low inflation in the UK, and right now the big question is whether that was a one-time fluke or indeed the growth has slowed down. As you remember, UK had a bad weather with flooding so a lot of people think it was a one-time fluke. This is the first indicator coming out of UK for the month of August, very timely indicator, especially that services is 85% of the UK economy. It is expected that this indicator will come out at 56.5 which would be the lowest reading ever. If it comes out at 57.5 or higher, GBP/USD may possibly go up by 40 pips or more in the first hour of the report. If this indicator comes out at 55.5 or lower, I think GBP/USD may possibly go down by 40 pips or more in the first hour of the report. I would not be surprised if we even see a decent move of 30 pips or more even if a deviation is half a point but that would be a more risky trade, and a lot of current situation factors (such as price levels right before the report) would have to be taken into consideration. A deviation of 1 should be a relatively safe deviation for this one.

2. Wednesday, September 5th, 2007 (8:15 a.m. New York Time) USA
Then at 8:15 a.m. New York time we will have ADP non-farm employment change which always comes out about two days before the US Non-Farm Payroll report. It's very clear that everything out of the U.S. is important right now because they are contemplating about a possible cut on interest rates so it is expected that this indicator will come out at 80,000. If it comes out at 40,000 or below, I think GBP/USD may possibly gain 50 pips or more in the first hour of the report. On the other hand, if it comes out at 120,000 or more, I think GBP/USD may possibly go down by 50 pips or more in the first hour of the report. Timing is crucial, and I think we may see a much more exaggerated move than normal.

3. Wednesday, September 5th, 2007 (9:00 a.m. New York Time) CANADA
Then at 9 a.m. New York time we have Canadian interest rates statement. It is expected widely they are going to keep everything unchanged at 4.50%. Canadian indicators have been coming out questionable regarding their growth, and I highly doubt that they would hike it. There may be some comments accompanying this statement, and if the comments are hawkish hinting towards the next rate hike being pretty close, USD/CAD may possibly go down by 40 pips or more in the first hour of the report. If the comments are eliminating a rate hike in the near future, then we may see USD/CAD gaining 40 pips or more in the first hour of the report. If you're inexperienced, don't trade this report.

4. Wednesday, September 5th, 2007 (9:30 a.m. New York Time) AUSTRALIA
At 9:30 p.m. New York time we will have Australian employment change coming out. This is one of my most favorite indicators; it deviates pretty often and it's relatively easy to make money on this one. The employment is expected to read 18,000. In my opinion, if it reads at 30,000 or higher, we may possibly see AUD/USD gaining 30 pips or more in the first hour of the report. If it comes out at 5,000 or lower, AUD/USD may possibly lose 30 pips or more in the first hour of the report. Usually there is a very nice retracement, and it is very easy to get in after the spike. Look for an entry within 10 to 12 pips of the prerelease price.

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