Forex Signal (Mon August 30, 2010 9:30pm EDT NY Time) AU Retail Sales m/m

Henry Liu

Former FPA Special Consultant
We’ll be getting the Retail Sales figure from Australia today once again, and if you’ve been following news out of Australia, you’d know that Retail Sales has been a sticky point for aussie economy and a strong improvement may change the short term trend for the currency. Here’s the forecast:

9:30pm NY Time AU Retail Sales Forecast 0.4% Previous 0.2%

The Trade Plan
The deviation that we are looking for the Australian Retail Sales m/m release is for a minimum of 0.6%. If we get a 1.0% (or better) we'll look to buy and if we get -0.2% (or worse), we’d look to SELL. There is a high probability of market movement of over 50 pips in the next 2 hours if we get our deviation.

We'll be looking for an after-news retracement trade and we'll do the 3 W's. Wait for the deviation, wait for the market to move with momentum first, and wait for a decent retracement. For more information on my trading methods, please read:
Henry's News Trading Method

The Market
AUD/USD made it above the 0.90000 on Sunday open benefitting from the risk appetite sentiment of a possible BOJ Intervention. However, the gains were pared off after BOJ disappointed the market with a much smaller stimulus than expected.

With the general sense of risk aversion, I would expect the market to sell off AUD on a weaker Retail data. However, if we get a strong data, there might be an opportunity to SELL into the rally as AUD/USD pushes up towards the 0.9100~0.9200 levels. I believe with recent economic releases and the uncertainty over its political direction, AUD should retrace down to the 0.8800 level once the initial optimism is over.

Additional Thoughts
AUDUSD is a very slow moving currency pair. If the release hits our deviation, we may have to jump in sooner than later... We could see very little retracement, if any, if we get a huge surprise in the market.

Pre-news Consideration
I don't think Retail Sales out of AU has the momentum to move pre-news market... So I'd stay out of the market.

“Measures the value of sales at the retail level. A rising trend has a positive effect on the nation’s currency because Retail Sales make up a large portion of consumer spending, which is a major driver of the economy and has a sizable impact on GDP. Traders payclose attention to Retail Sales because it is usually the first significant indicator of the month that relates to consumer behavior and is susceptible to surprises.”

Historical Chart & Data For AU Retail Sales


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Thank You

Henry, your insight and experience is extremely, extremely appreciated on this forum. Having the best analyst and the best forex site working together is a valuable asset to us. Thank you for being our teacher.

Kingsley Obase

What more can i say. You are simply awesome and your analysis very spectacular. I thank Felix for bringing you to this forum and you, for accepting to share your invaluable knowledge with us. You are a mentor and a very good teacher. Please keep doing more.

Thanks again.