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Archive:31st July 2006:
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The Lion's Blog... Week 37September 15th, 8:30 am (New York Time) US
U.S. CPI excluding food & energy is coming
out. Expected number is 0.2%. It's a pretty unanimous expectation.
This report has excellent history, and is known to move on even 0.1%
deviation. So if the number comes out at 0.3% or higher, that should be
bullish for the dollar, so I would go short on GBP/USD. If the number
comes out at 0.1% or lower, that should be bad for the dollar, so I
would go long on GBP/USD.
September 15th UpdateThe number came out exactly as expected so no trade. September 14th, 2006 (4:30 am New York Time) UKMonthly UK retail sales are coming out. The average consensus on this report on both Reuters and Bloomberg is at 0.3%. I've analyzed carefully opinions of around 30 economists and bank traders, and their opinions range between 0% and 0.5%. If the number comes out at 0.6% or higher, I am planning to go long on GBP/USD. If the number comes out at -0.1% or more negative, I will go short on GBP/USD. That's very safe triggers in my opinion. I believe such deviations will cause a move on GBP/USD of over 30 pips, possibly even as much as 50 pips. A less conservative and still acceptable triggers in my opinion could even be 0.1% for a short and 0.5% for a long. I am still contemplating whether to go more conservative or less, I will do more research closer to the report. This report does have revisions usually, so I'd definitely be looking for that, and possibly plan my exit around that. September 14th, 2006 (8:30 am New York Time) USAUSA retail sales are coming out. We have two numbers, regular which is headline retail sales number, and X autos retail sales, which is core number. My focus is going to be on the X autos number. Between Reuters and Bloomberg, the X autos number is expected at around 0.3%. Sometimes the X autos number conflicts with headline number, so be aware of a possibility of crazy price action if that happens in the first few seconds...but usually the market goes towards the X autos or core number, assuming that there is enough deviation. Looking at the opinions of about 75 bank traders and economists, their expectations range anywhere from -0.6% all the way to 0.4%, averaging to about 0.3%. Such difference in opinions is actually a good sign in my opinion, because I think that's more chance that the number will deviate. If the number comes out at 0.5% or higher, that's good for the U.S. dollar, so I will go short on GBP/USD. If the number comes out at 0% or negative, that should be bad for the dollar, so I will go long on GBP/USD. I am expecting a move of over 30 pips on this report as well, if my triggers are hit. We will most likely see revisions too.
Remember, what's really important is where the price is at few minutes
before the report. Sometimes there are strong price levels or
resistance or support that haven't been broken for a while, so if they
are let's say within 25 to 35 pips or so, very often the price will
bounce off of them and that will limit the move. If the price is too
close to a support or resistance level by let's say 10 or 15 or even 20
pips, very often if the deviation is enough, that level gets broken, and
usually we get a much bigger move out of the news. The actual price is
very important at the news report, so I would definitely pay attention
to that, and plan my exit strategy accordingly.
September 14th, 2006 UpdateThe two reports pretty much came out as expected. So they were no trades. It was the UK Retail Sales and U.S. Retail Sales. September 13th, 2006 (1:00 am New York Time) JAPANWe have Bank of Japan meeting minutes coming out. If Bank of Japan is discussing a possibility of another interest rate hike, and is being hawkish, that should generally be bearish for USD/JPY. If they are talking about no future rate hikes and are being dovish, that should generally be bullish for USD/JPY. September 13th, 2006 UpdateThe Bank of Japan meeting minutes wasn't traded September 12th, 2006 (4:30 am New York Time) UKCPI coming out of UK. Consensus is 0.3%. If the number comes out at 0.4% or higher, I will go long on GBP/USD. If the number comes out at 0.1% or lower, I will go short on GBP/USD. I am expecting a move of at least 40 pips, however, I will be looking at my 5-sec chart to exit, and if I start seeing retracement, I'll exit before if I have to. September 12th, 2006 (8:30 am New York Time) USAThe U.S. trade balance is coming out. The consensus for this report is pretty unanimous at -65.5 billion. If the number comes out at -70 billion or more negative, I will go long on GBP/USD. If it comes out at -59 billion or less negative, I will go short on GBP/USD. I will be looking at my 5-second chart to exit as soon as I start seeing significant retracement. September 12th, 2006 Update
The CPI was a no trade according to my
trigger of 0.2% deviation. The deviation was only 0.1% better than
expected, and the pound did move up by over 50 pips or so.
The USA trade balance coming out.
The trade balance came out way worse than expected, so bad for
the dollar. The pound only spiked about 30 pips in the first few
seconds, and then rapidly dropped below pre-release
price. A gain of 12 pips. Historically, such
big deviation has usually given a move on the pound of about 80 pips,
which I was hoping to see, but that definitely wasn't the case today.
In my opinion what really happened was that the GBP/USD was already
overbought from the CPI number earlier, and considering the general
trend down, there were some heavy players that saw the trade balance
as simply an opportunity to short the GBP/USD at a good price, so the
report didn't move as much as it should normally move.
September 11th 2006 (4:30 am New York Time) UK
Trade balance comes
out of the UK today.
Expected number is -6.2 billion. If the number comes out at -5.7
billion or less negative, I will go long on GBP/USD. If the number
comes out at -6.7 billion or more negative, I will go short on GBP/USD.
If my triggers are hit, I am expecting a move on the GBP/USD of at
least 40 pips.
However, the price before the report always has to be factored in. Sometimes there may be strong resistance or support at a level away by 25 or 30 pips, like it was on the USD/CAD report, and if that price level holds, of course the move is going to be smaller. If 1140 wasn't a strong level on that USD/CAD trade on Friday, I believe the move would be at least 50 pips on the number, but because of the strength of that level, the maximum move came out to be only 35 pips. Price level applies to every report by the way. Definitely watch out for revisions on this GBP/USD trade. If the revision is conflicting by at least 0.2 billion, I would take my profits then and there. September 11th 2006 UpdateThe UK trade balance came out slightly worse than expected, so we did see the pound move down. However, it didn't hit our trigger, so it was a no trade. Normally historically the pound didn't really react as much on such small deviation as yesterday. However, the move down yesterday was pretty significant.
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