Forex Signal (Mon. October 4 2010, 8:30pm NY Time EDT) - 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:

8:30pm NY Time AU Retail Sales Forecast 0.5% Previous 0.7%

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 1.1% (or better) we'll look to buy and if we get -0.1% (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 is close to historical high level currently and with RBA rendering its rate decision in under 3 hours, we should see some limited volatility in the market as traders brace for the rate decision.

With AUDUSD at the current overbought level, unless we get a strong release, market will probably stay on the sidelines... therefore stay out of the market unless we get our tradable deviations.

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
With RBA possibly hiking rates, we'll probably see some pre-buying of AUD; therefore if AUDUSD dips, I may jump in on a LONG trade.

“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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