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Forex Signal (Fri June 3 2011, 4:30am NY Time EST) - UK Services PMI

Discussion in 'Current Forex Trading Signals' started by Henry Liu, Jun 2, 2011.

  1. Henry Liu

    Henry Liu Former FPA Special Consultant

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    We'll be trading the UK Services Purchasing Manager Index today at 4:30am (NY Time). This is a leading indicator similar to the Manufacturing PMI that was released early this week, here愀 the forecast:

    4:30am (NY Time) UK Services PMI Forecast 54.4 Previous 54.3
    ACTION: GBP/USD BUY 57.0 SELL 52.0


    The Services PMI is tradable with a minimum deviation of 2.5 between the forecast and the actual release. If we get at least 57.0 or better, we could see some demand in the GBP and we will consider BUYING GBP/USD or GBP/JPY pairs. If we get a 52.0 or lower, GBP could weaken and we should look to SELL GBP/USD or GBP/JPY pairs. If the actual release is below the medium 50 level, then we should jump in (spike trade) and SELL GBP/USD or GBP/JPY pairs.

    Important Note: The only time I'd recommend a spike trade is when there is momentum pushing the currency which, regardless of spread and slippage, could result in a profit if you hold on to the trade.
    Use the after-news trading method. For more information on my methods:
    Henry Liu's Trading Method

    The Market
    The Sterling continued to suffer against the Euro this week after the poor Manufacturing PMI release hurt the chances of a near-term interest rate hike. The UK continues to endure a struggling improvement in their economic market as policy makers remain uncertain as to when interest rates will be raised in order to counter inflation pressures. The Services sector expects to hold around 54.0 but a worse than expected forecast may cause the sterling to weaken even further against the Euro.

    Additional Thoughts
    UK's economy is 87% Services related. If we get a strong release on this PMI, we could see GBP sentiment turn bullish regardless of the fact that the PMI release doesnt change the long-term trend. As a leading indicator released early in the month, it helps to define the trend for the rest of the month.

    Pre-News Consideration
    There is no pre-news consideration for this release...

    DEFINITION:
    The Chartered Institute of Purchasing and Supply (CIPS) Services Purchasing Manager's Index (PMI) measures the activity level of purchasing managers in the services sector, with a reading above 50 indicating expansion. A rising trend has a positive effect on the nation's currency. To produce the index, purchasing managers are surveyed on a number of subjects including employment, production, new orders, supplier deliveries, and inventories. Traders watch these surveys closely because purchasing managers, by virtue of their jobs, have early access to data about their company's performance, which can be a leading indicator of overall economic performance.


    Historical Chart and Data for UK Services PMI



    Thanks,



    [​IMG]
     
    #1 Henry Liu, Jun 2, 2011
    Lasted edited by : Sep 8, 2016

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