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Archive:31st July 2006:
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The Lion's Blog... Week 34We have no trades on Monday, August 28th, 2006. August 25th (4:30 am New York Time) UKWe have Quarter over quarter GDP coming out of UK. Expected number is 0.8%. I almost don't have any hopes for this report. It usually never deviates. It only deviated twice this year. Both times by only one tenth of a percent. It happened in June and July. In June, the pound moved up according to the deviation by over 30 pips, however, we had the UK Current Account come out at the same time, and it helped to fuel the move. Then in July, the GDP alone came out, it deviated by only 0.1%, and it caused a quick spike up by about 20 pips, and then quick retracement to below pre-release price.
So, I'll be watching this report, and looking for a deviation of
0.2%. So if the GDP comes out at 1.0% or higher, I will go long on
GBP/USD. If it comes out at 0.6% or lower, I will go short on GBP/USD.
Anything between 0.7% and 0.9% is a no trade for me.
August 25th (10:00 am New York Time) USAWe have Ben Bernanke speaking at 10:00 am New York Time. This speech may move the market. If Bernanke talks about having another interest rate hike, the EUR/USD will probably show immediate weakness. If he talks about no more hikes, EUR/USD will probably show immediate strength. If you don't have Bloomberg cable TV, you can watch the speech on Bloomberg TV via the internet. Simply go to www.bloomberg.com, scroll down, and click on "Live TV". Internet TV is about 30 seconds delayed from cable TV, so be aware of that. August 25th Update
The UK GDP, which came out as expected,
was a no trade. We also had the Bernanke speech, which moved
the EUR/USD down by about 35 points, and then EUR/USD went back up.
I personally didn't trade it.
August 24th, 2006 (8:30 am New York Time) USAWe have Durable Goods coming out of USA at 8:30 am. We have the headline number and the Ex Transportation number.
The Ex Transportation number is the important number.
In June, the headline number came out way
worse than expected, and ex-transportation came out just one point
higher, and it created a chaotic move down,
even though it would seem like the headline number was so much worse,
and should've been bad for the dollar, so positive for EUR/USD.
So the consensus on the headline number, which is regular Durable Goods varies so much...it goes from -0.5% to 0.5%. The consensus on Durable Goods x Transportation is pretty unanimous at 0.3%. If the number comes out at 1.0% or higher, I will go short on EUR/USD. If it comes out at -0.5% or more negative, I will go long on EUR/USD. Anything in between is a no trade. Once I am in the trade, I will carefully look at the headline number, and if it's conflicting, I'll probably exit right away. This can be a pretty crazy report. Very often the numbers deviate by A LOT, the market goes crazy, so be prepared for anything after the first spike...if may go the opposite direction, or may continue going the right direction... August 24th, 2006 (10:00 am New York Time) USAWe have New Home Sales coming out of the U.S. The consensus is very unanimous at 1.1 million. Here is the deal about this report...most people right now have a negative outlook at U.S. Housing, so worse than expected numbers will move the market a lot less than if the number comes out better. Here is what I am going to do. Since last month, the number came out at 1.13 million, my short trigger will be 1.15 million. If it comes out at 1.15 million or higher, I will go short on EUR/USD. My ultimate target will be 50 pips. I will trail my stop starting from pre-release price, and moving it lower and lower to lock in profits. Probably by about 10 to 15 pips. If the number comes out at 0.99 million or lower, I will go long on EUR/USD. I believe 1 million is a pretty strong psychological level, and if it drops below that, it signifies significant housing slow down in the U.S., and I believe it will have a strengthening effect on EUR/USD. If EUR/USD continues staying at mid 1.2700s or lower, my ultimate target will be about 70 pips, but again, I will keep trailing the stop to lock in profits, and if the EUR/USD gains some strength overnight before this report or during Durable Goods, I may settle for a less conservative ultimate target. August 23rd UpdateThere were no trades earlier today. The Durable Goods didn't hit our trigger, and new home sales didn't hit our trigger either. If you watched the durable goods, you probably saw that the headline number was terrible for the U.S., however the core number was slightly better, so the EUR/USD quickly spiked up but within seconds went down below pre-release price. Core number is the key. August 23rd, 2006 (10:00 am New York Time) USAWe have existing home sales coming out of the U.S. Expected number is at 6.55 million. This report usually comes out with other reports, such as consumer confidence or Chicago PMI or whatever. So there is very little history of this report being isolated. At the same time, throughout this year, the deviation has been almost none, because the U.S. government tends to predict their housing numbers pretty well. If the numbers came out at 6.70 million or higher, I go short on EUR/USD, put my stop/loss at 10 pips above pre-release price, set my limit at 50 pips below pre-release price, and watch the price action, trailing my stop about every 15 to 20 pips or so. I will stay in the trade until about 10:30 am New York Time, and if my stop or limit doesn't get hit, I will just exit at 10:30 am no matter where the price is at. If the numbers come out at 6.35 million or below, I will do the exact same scenario, but instead would go long on EUR/USD. A number between 6.36 and 6.69 million would signify a no trade. Good luck! August 23rd Update
The existing home sales came out worse than expected. It signified
a long on EUR/USD according to my trigger above.
The price moved rather fast about 18 pips, and stayed there for a
few minutes. I managed to get in and out in 30
seconds with 8 pips.
I hope you made some money on this report, if you didn't due to bad fill in the beginning, don't feel too bad, as I said yesterday, this report had very little history on being on its own before. If the report came out higher than expected it would probably cause a much bigger move down, simply because U.S. has been raising interest rates, and everyone has been expecting a decline in housing sales, so if all of a sudden it came out better than expected, it would be a pleasant shock, and the dollar would strengthen, therefore the EUR/USD would go down.
Again, this report wasn't that good, the move was pretty fast and not
that big, and it's possible that you may have lost a few pips if you
didn't catch the first spike...if that was the case, please don't
worry, there will be many other good reports.
August 22nd, 7:00 am (New York Time) CANADAWe have CPI coming out of Canada. We have two monthly numbers coming out. We have the Regular CPI, and we have the Core CPI. Core CPI may also be called as CPI excluding volatile items. My focus on this report will be Core CPI. Often we get nice long moves of over 50 pips each. And the cool thing about these reports, is that there are no revisions. I am not sure why, but there hasn't been one revision yet on this report this year. There is a good reason why I focus on core numbers, because they are more important than regular CPI numbers. Please note that sometimes Canadian reports come out a few minutes or seconds earlier than expected, so whatever news service you are using, keep your eyes and ears open, and be ready to place an order at least 5 minutes before the actual report, in case there is early release. So here is my plan for this report today. My focus again is monthly CPI core numbers, which unfortunately doesn't have a very unanimous consensus. Consensus on this one vary between -0.1% and -0.3%. If you look at the www.dailyfx.com calendar, they don't even list consensus for monthly core CPI, because it's kind of all over the place. But here is what I am going to do. If the core number comes out at 0.1% or higher, I will go short on USD/CAD. If it comes out at -0.6% or lower, I will go long on USD/CAD. Anything in between is a no trade. If the number comes out negative, hits my trigger, and I have to go long on USD/CAD, I'll be cashing out at 45 pips, no matter what (that's of course from the beginning of the spike, not necessarily my entry). That's my ultimate target on the long. If the number is better than expected, and I have to go short, my ultimate target is 75 pips from the beginning of the spike. Again, these are just targets, that if they get reached, I am taking my profits, no matter what happens. Of course, it's very possible that these targets won't be reached, and if they are not reached, I will have to play my exit by ear, based on what the market is doing. If I start seeing a solid retracement going against me, I'll be taking my profits then and there. August 22nd UpdateCore CPI came out of Canada today. The number came out slightly negative, -0.1. So in terms of our blog it was a no trade. I said if the core number comes out at 0.1% or higher, I will go short on USD/CAD. If it comes out at -0.6% or lower, I will go long on USD/CAD. Anything in between is a no trade. However, it was nearer our short position than our long entry point so I went short and picked up a quick 14 pips before it started to re-trace. Sorry to those of you who didn't enter a trade - it was a judgement call at the time. At 2006.08.22 13:01:05 order #2288979 sell 1.00 USDCAD at 1.1180 sl: 1.1210 tp: 1.1150 closed at price 1.1166. This trade is featured here. August 21st, 2006 (8:30 am New York Time) CANADA
We have retail sales coming out of Canada. There are two monthly
numbers. There is the headline number, and there is the
number Less Autos. Both are expected at 0.3%. 90% of the
time, the numbers come out the same direction, which is what we
ideally want.
My focus is Retail Sales Less Autos, which is expected at 0.3%. If the number comes out at -0.1% or more negative, I will go long on USD/CAD. If the number comes out at 0.6% or higher, I will go short on USD/CAD. Again, that's X Autos number. Then, once I enter the position, I will look at all the other numbers, including revisions to make sure there are no conflicts. If there are some conflicts, I will be careful, and may be looking to take my profits and exit immediately. Here is the thing...if your broker widens spread during news, I suggest entering only, if your broker's spread is 10 pips or below on this report. If it's 11 pips or above, I don't think it's worth taking this trade. Usually CAD retail sales cause a move of about 20 pips, last month was great, about 50 pips, but I don't know if it'll be that much again. So paying higher than 10 pips spread on this particular report is not worth it in my opinion. August 21st UpdateThe main number came out at -0.2% so I went long on USD/CAD. I bought at 1.1190 and sold at the peak - 1.1218. If the number had come out at 0.6% or higher, I would have gone short on USD/CAD. This trade is featured here. 28 pips in less than a minute. I hope some of our visitors were on it.
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