Trading Signals and News Update For Thursday

We had a very interesting day. I said if the Services PMI comes out at 57.5 or higher, we may possibly see GBP/USD going up by 30 to 40 pips in the first hour of the report. It came out 57.6, it hit the trigger, and as you could see, the price opened at 2.0073, it spiked and retraced to pre-release price. Within 1 hour it went up 28 pips or so. If you made money on this, congratulations. If you did not, this was a hard one to trade, I personally expected much more violate move.

Then at 8:15 New York time we had ADP Employment change coming out. It came out much worse than expected, it hit my buy trigger on GBP/USD. I was expecting a move of at least 40 pips but unfortunately it went up by 15 pips or so, and then it consolidated within a range of 15 to 20 pips for the next hour. I was very surprised by that. If you made money on this - congratulations. If you lost a little or broke even, it was not a big deal. I cannot imagine anyone losing more than a couple of pips.

Then actually at 10 a.m. we had pending home sales. I did not tell you about it because I did not feel that would be an important one but it was a tape bomb. It came out a whopping -12.2% versus -2% expected, and we had GBP/USD going up by about 100 pips in the first hour of the report. If you made money on this, congratulations. I didn't talk about it yesterday, and I did not take advantage of the move. It was a totally surprise, and I wish I watched it but I did not.

Then at 9:30 p.m. New York time we had Australian employment change coming out. It came out at 31.9 K, and I said if it comes out at 30,000 or higher, AUD/USD may possibly gain about 30 pips or more in the first hour of the report, and we also talked about the fact that the price should retrace within 10 pips of the prerelease price, and you could get in on the retracement. That's exactly what happened. The price opened at 8207, and it retraced to around 8213 or so. If you set up reasonable SL, within the first hour it reached 8235. It hit our 30 pips target, and generally behaved the same way like in the past, except the retracement came out a little bit slower than normal. If you made money on this, congratulations; if you didn't, this definitely wasn't the easiest employment change to trade.

Let's talk about tomorrow.

1. Thursday, September 6th, 2007 (4:30 a.m. New York Time) UK
Tomorrow at 4:30 a.m. New York time we will have industrial production coming out of UK. I suggest skipping that one, manufacturing definitely hasn't been in focus in UK.

2. Thursday, September 6th, 2007 (7:00 a.m. New York Time) UK
Then at 7 a.m. New York time we will have UK interest rate statement coming out. I strongly believe that there are going to hold the rates at 5.75%, I think there is almost no chance for surprise considering their CPI and everything. You might skip that one as well. If you want to watch it, and for some reason they are going to hike to 6%, I think GBP/USD may possibly go up by 200 pips ore more in the first hour of the report. Unfortunately, that's extremely unlikely to happen.

3. Thursday, September 6th, 2007 (7:45 a.m. New York Time) EURO ZONE
At 7:45 a.m. New York time we will have interest rate statement coming out of euro zone. This is a very interesting one. For the first time in a while if not ever, everybody is unclear what the euro zone will do. The Euro zone up to date was very methodical at a rate increases so everybody always knew if they would increase or hold because Trichet would say special key words prior the hike. This particular time he basically said that they have to look at what was going on, and then see what to do. There is about 80% chance they are going to hold, and about 20% chance they are going to hike. It is unlikely they would hike but there is a possibility they would do that. If they hike to 4.25%, EUR/USD may possibly go up by 80 pips or so in the first hour of the report. If they hold the rate, it may be a good possibility for a short depending on what EUR/USD and EUR/JPY are doing in 30 minutes before the report time. If they're creeping up, and they gain more than 20 pips within 30 minutes before the report, I think short on EUR/USD if it was a no hike could be warranted.

4. Thursday, September 6th, 2007 (8:30 a.m. New York Time) EURO ZONE
Then at 8:30 a.m. New York time we have Trichet delivering his speech which is definitely another key thing to look at. If for some reason he is somewhat hawkish, and economists consider his speech as a hint towards a rate increase, even if not next month but in two or three months, I think EUR/USD may possibly gain 60 or 70 pips in the first hour of the report. On the other hand, if he is completely dovish and uncertain, it is going to be difficult to trade. Trade only hawkish comments.

5. Thursday, September 6th, 2007 (10:00 a.m. New York Time) USA
At 10 a.m. New York time we will have ISM non-manufacturing coming out. This seems to be a very interesting indicator that definitely could be tradable. It is expected to come out at 54.5 versus 55.8 last month. If it comes out at 52.3, that would be the lowest reading since April 2003, and it definitely would not help the U.S. dollar, considering all the other indicators that have been coming out below expectations. A reading of 52.3 or lower could possibly send GBP/USD up by 40 pips or more in the first hour of the report. It will really depend where the GBP/USD is before this report. If the reading comes out at 57 or higher, it would definitely be considered as a strong reading, and we may possibly see GBP/USD going down by 30 pips or more in the first hour of the report. Again, a price level right before this report will be extremely important because this is not a key indicator, and a price level right before this indicator will make a huge difference.

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