Henry Liu
Former FPA Special Consultant
- Messages
- 473
Today’s Retail Sales number from UK will be widely watched as this is a high impact yet tradable report. Here is the forecast for this release:
4:30am (NY Time) Forecast 0.3% Previous 0.7%
ACTION: GBP/USD BUY 0.9% SELL -0.2%
The Trade Plan
Retail Sales by definition is a direct measurement of consumer activities at the retail levels. A higher release is generally good for the economy, and better for it’s currency; a lower release is considered as negative for the economy and not good for it’s currency.
Our tradable deviation or surprise factor for UK Retail Sales is 0.6% to BUY and 0.5% to SELL. If our deviation is hit, we can expect the market to move at least 50 pips within the hour, with a historical accuracy of 74%. We’ll be looking to BUY GBP/USD if we get a 0.9% or better release, and SELL GBP/USD if we get a -0.2% or worse.
We'll be looking for an after-news retracement trade for this release. For more information on my trading methods:
Henry's News Trading Methods.
The Market
Today's MPC Meeting Minutes surprised the market with an unanimous vote against increasing the quantitative easing programor APF. Andrew Sentance was once again the only dissenter voting for a rate hike of 25 basis point in a 1-8 vote against further tightening policy.
Because of recent BOE Inflation Report and uncertainty in the inflation letter sent by BOE Governor King to the Chancellor of the Exchequer George Osborne, market was speculating at least two votes for increasing the Asset Purchasing Facility by another 25 Billion Pound. Needless to say, traders immeidately bought the GBP after the meeting minutes trying to price in this bullish release...
However, the overall sluggish outlook for UK's economy remains unchanged. I would expect to see long-term bearish trend to resume. Seeing how the market retraced from the 1.5680 level down to the 1.5580 during late NY trading session should be an additional confirmation that the momentum for the GBP rally is short-lived.
Additional Thoughts
GBP/USD will need to break and remain above the 1.5700 in order to see further gain. However, with recent housing data, employment data, and the CPI data all pointing to the fact that recovery in UK economy is stalling; and adding the bearish tone from last week's quarterly Inflation Report and this week's Inflation letter by BOE King, we are looking at a possible change of sentiment for the GBP with the first psychological support level at 1.5000 in perhaps 3 months.
Pre-news Consideration
With Claimant Count at -3.8K versus -17.0K, tax increases, job cuts, tough austerity measures, and negative fundamental sentiment, it is likely to see limited pre-selling in the GBP prior to the release today. I'd be looking for a pre-news sell on a decent spike up.
For historical chart & data for UK Retail Sales
Thanks,
4:30am (NY Time) Forecast 0.3% Previous 0.7%
ACTION: GBP/USD BUY 0.9% SELL -0.2%
The Trade Plan
Retail Sales by definition is a direct measurement of consumer activities at the retail levels. A higher release is generally good for the economy, and better for it’s currency; a lower release is considered as negative for the economy and not good for it’s currency.
Our tradable deviation or surprise factor for UK Retail Sales is 0.6% to BUY and 0.5% to SELL. If our deviation is hit, we can expect the market to move at least 50 pips within the hour, with a historical accuracy of 74%. We’ll be looking to BUY GBP/USD if we get a 0.9% or better release, and SELL GBP/USD if we get a -0.2% or worse.
We'll be looking for an after-news retracement trade for this release. For more information on my trading methods:
Henry's News Trading Methods.
The Market
Today's MPC Meeting Minutes surprised the market with an unanimous vote against increasing the quantitative easing programor APF. Andrew Sentance was once again the only dissenter voting for a rate hike of 25 basis point in a 1-8 vote against further tightening policy.
Because of recent BOE Inflation Report and uncertainty in the inflation letter sent by BOE Governor King to the Chancellor of the Exchequer George Osborne, market was speculating at least two votes for increasing the Asset Purchasing Facility by another 25 Billion Pound. Needless to say, traders immeidately bought the GBP after the meeting minutes trying to price in this bullish release...
However, the overall sluggish outlook for UK's economy remains unchanged. I would expect to see long-term bearish trend to resume. Seeing how the market retraced from the 1.5680 level down to the 1.5580 during late NY trading session should be an additional confirmation that the momentum for the GBP rally is short-lived.
Additional Thoughts
GBP/USD will need to break and remain above the 1.5700 in order to see further gain. However, with recent housing data, employment data, and the CPI data all pointing to the fact that recovery in UK economy is stalling; and adding the bearish tone from last week's quarterly Inflation Report and this week's Inflation letter by BOE King, we are looking at a possible change of sentiment for the GBP with the first psychological support level at 1.5000 in perhaps 3 months.
Pre-news Consideration
With Claimant Count at -3.8K versus -17.0K, tax increases, job cuts, tough austerity measures, and negative fundamental sentiment, it is likely to see limited pre-selling in the GBP prior to the release today. I'd be looking for a pre-news sell on a decent spike up.
For historical chart & data for UK Retail Sales
Thanks,
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