Forex Signal (Tue, August 24 2010, 8:30am NY Time EST) - CA Core Retail Sales...

We’re getting the Core Retail Sales release from Canada today, and it is a high impact release which may change the short term trend of the market for CAD. Let’s look at the forecast:

Core Retail Sales Forecast 0.1% Previous -0.1%
ACTION: USD/CAD BUY -0.5% SELL 0.7%

The Trade Plan
I’m going to be looking for a deviation of 0.6% for this news. Since the forecast is at +0.1%, if we get a -0.5% or worse, it would be negative for the CAD and we’ll be looking to BUY USD/CAD; however, if the opposite is true, or a 0.7% of actual release, I’ll be looking to SELL USD/CAD.

I'll be looking to trade this release using my after-news retracement method. The idea is to wait for the release, wait for market to spike first, and then wait for a decent retracement before getting in. For more details on my trading method:
Henry's News Trading Method.

The Market
Recent data out of Canada suggests that Inflationary pressure is easing, and with the rebound of USD in the past few weeks, commodity currencies including CAD are trading lower as market shift from risk appetite to risk aversion.

Looking ahead at this Retail Sales data, speculators will focus on this release in expectation of BOC's (Bank of Canada) reaction. If we get a rather weak Retail Sales, there may be some possibility that BOC won't hike rates in the coming September 8th meeting.

However, I do believe BOC will hike rates as most analysts agree, but the real focus will be on whether or not this rate hike is the end for this year or will BOC keep on hiking... Understanding that the market always look ahead, if BOC hikes rate as expected but announces a pause, expect to see weakness in the CAD... We'll talk about this in more detail later.

Additional Thoughts
USD/CAD is the recommended pair, if we get a strong deviation, don’t expect much retracement as this pair should move steadily and gradually until after the European market close, which is around 11:30am EST.

If we get a good release, it is justifiable to jump in a trade even if the market didn’t retrace back within 20~30 pips of the pre-release level, because usually USD/CAD pair will spike, retrace about 20 pips from the spike high, and then retest the spike highs and make a breakout. Just be mindful of the 1.0680 Resistance area and as long as we are not close to it, USD/CAD should react according to our trade plan.

Pre-news Consideration
As the broader market awaits the next move out of BOC, the current level for CAD seems well anchored. I'd expect some volatility prior to the release, but I wouldn't expect a strong sentiment driving this currency... However, with that being said, we are looking at a broader sentiment of risk aversion, which may go against commoditiy currencies, therefore I'd probably stay away from pre-news today.

Definition
Our focus is on the Core Retail Sales release and not the headline Retail Sales release; Retail Sales releases from Canada is a month on month release, and basically it’s a measurement of the activities at the retail level of Canada, and the Core release is the same Retail Sales but excluding most volatile components, Automotive Components, which makes up about 25% and it varies seasonly. A better release generally means more consumer spending, which leads to better economy, thus better for its currency. And the CORE reading provides a far more accurate look of the actual economy.

Historical Chart & Data Of CA Core Retail Sales

Thanks,

 

Thank's again

Thank you sir for the info

 

Thanks

Thanks for the info Henry, i'm really learning.

 

thanks henry..for the analysis

jay

 

any words of wisdom CAD doesnt seem to be reacting as predicted. was the move up before the announcement and out of steam?

 

-13 pips on this one :- (

I closed it at this point as I didn't see the point in risking more... turned out I could have broken even (or even made a few pips) if I had waited a little more, but obviously that would have risked more too!

Ah well, can't win 'em all!

Did the news come out a little earlier than 1:30?

 

Ditto

Felt the same way to me.

 

You Guys Need to Start Being Real Careful

On both of the news events today...the CA Retail Sales and the US Existing Homes...the reaction to "so-called tradeable deviations", was very muted. The reason for this is that when the equity markets of the world go into a risk aversion mode...global meltdown eminent...and the "news" we trade becomes more like "noise". I've been doing this for some time and have witnessed this affect before. You need to move your deviations out...for instance, if you'd normally trade a +/-1.0 deviation, then to be safe you may want to consider a +/- 2.0. Henry, since many of these newbies seem to follow your recommendations so religiously, you may want to note a normal deviation and a safer deviation to trade.

Be careful and patient...this could get very expensive. Hopefully the equity markets will settle out at some point and the news will drive the markets harder.

 

Thanks for the words of wisdom, pipdog. Also when the alert came out we were already pretty close to 680 which Henry did say we should watch out for. This one didn't feel right and I lost a little but got the "willies" and bailed out before it got too bad. I don't mind losing as long as I know what happened and learn from it. Thanks again for your take. I'm writing that down in my trade journal for future reference!

 

READ Carefully

I have seen some Text about no PIPS in here

You have to read all Henry text before getting in a Trade... I made 20 PIPS on this one... Not Great but not a Lose Trade

It was very close from the Resistance and we have to be carefull about Henry Said.. and it was like that...

So Read carfeully the Text Friends...

And Henry Thanks a Lot...