Trading Signals and News Update For Friday

Yesterday we had the retail sales coming out of New Zealand, and I told you if it came out at 0.1% or lower, it would be a possible sell on NZD/USD. It came out at 0.2% so it did not hit my trigger so it was a no trade. NZD/USD slightly went down by 10 pips, and then it continued going up. In addition to that, we saw a conflicting revisions and other numbers. It was a no trade anyway.

Let's now talk about today, Friday.

1. Friday, October 12th, 2007 (8:30 a.m. New York Time) USA
Tomorrow we will have one set of reports that are worthy watching and possibly trading, and that's U.S. retail sales and PPI. The most important reading out of all 4 readings will be the retail sales CORE which is expected at 0.3%. Usually in September retail sales out of the U.S. is coming out strong. However, the last year and now retail sellers have been reporting worse data than everybody is expecting. They are expecting 0.3% which is basically nothing comparing to the last month it went down by 0.4%. If retail sales core reads at 0% or negative, that would be even worse than everybody is expecting, and probably bad for the U.S. dollar, and GBP/USD may possibly go up by 40 pips or more in the first 30 minutes of the report. The reason why I am saying 30 minutes is because we have Bernanke speaking 40 minutes later, and you don't want to be in trade with retail sales while Bernanke speaks because he may say something that may completely change the market direction. On the other hand, if the retail sales comes out at 0.6% or higher, that would be a pretty good rebound, more than everybody is expecting, and even more than decline of the last month, and I think based on that GBP/USD may possibly go down by around 40 pips or more in the first 30 minutes of the report. We also have the headline retail sales which normally does not conflict but watch out for any possible conflicts here. There are also possibilities for revisions, and we also have the PPI. The core PPI is the most important one but, unlikely to the headline number, it almost never deviates significantly as it is a very steady indicator. If there is a conflict between PPI and retail sales, we may see a retracement on the initial spike but I think the retail sales will pull this move out. Obviously, because so many indicators are coming out at the same time, it is always hard for me to do any analysis here so use the triggers if there is no big conflict. If there is a big conflict, then you need to look at it and judge, possibly just stay out. After the spike I would like to enter within 10 to 15 pips of the pre-release price, and maybe use 20 pips stop loss, and try to get 20 to 25 pips profit. Obviously, if you are able to enter with a price that is very close to the pre-release price, your SL can be smaller and TP may be bigger.

That's pretty much all for today.

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