Forex Signal (Wed. October 6 2010, 10:00am NY Time EDT) - CA IVEY PMI

Henry Liu

Former FPA Special Consultant
Messages
473
We'll be getting Canada IVEY PMI today, since this is a leading indicator, traders pay attention for this release, especially during the same week prior to Canada Employment Changes. Here's the forecast:

10:00am (NY Time) CA IVEY PMI Forecast 63.0 Previous 65.9
ACTION: USD/CAD BUY 66.0 SELL 60.0


The Trade Plan
Our tradable surprise factor is 3.0 as it has provided a good historical track record, but because we are so much above the medium point of 50, we need to get either a 66.0 or 60.0 (based on a forecast figure of 63.0) for us to take a trade. IVEY PMI is usually tradable before the Canadian Employment Changes and not after when scheduled at the same day. It is funny that IVEY PMI is a leading indicator and Employment Change is a lagging indicator, and both are actually figures of different month but the general market seems to ignore that and with this Friday’s Employment Changes release, this PMI may fuel some fundamental sentiment in the CAD currency if we get a strong/weak employment component out of this release.

We'll look to BUY USDCAD if we get 60.0 or less, and we'll look to SELL USDCAD if we get 66.0 or better. I'll be using Retracement Trading method. To find out more about my trading system, read:
Henry's News Trading Methods.

The Market
We’ll focus on the IVEY PMI (IVEY Purchasing Manager’s Index) from Canada today, it is the equivalent of both ISM PMI’s out of US where purchasing managers of all sectors of the economy participate in this survey. And as with PMIs, they are all considered as leading indicators with the medium point at 50, therefore a reading of above 50 would be considered as expansion in the economy whereas a reading below 50 would be considered as contraction in the economy.

With USD under significant pressure and commodities rising, we may face more resistance if we get a stronger than expected release as we are close to the support level with USDCAD. However, on a weaker release, we could see more potential in the reversal.

Additional Thoughts
USDCAD may not retrace much after a strong release, the retracement may also take place in the first 5 minutes, so once we see a significant retracement, get ready to jump in.

Pre-news Considerations
No Pre-news trade for this release.

DEFINITION
“The Ivey Purchasing Manager’s Index (PMI) measures the activity level of purchasing managers from all sectors of the economy, 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 & Data For IVEY PMI

Thanks,


 
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salah seleim

Recruit
Messages
1
How can i Know?

How can i Know? when the paired USDCAD get 60.0 or less (BUY), and USDCAD if we get 66.0 or better (SELL). please Shows me how?
thannks for you>
salah
 

amar_butt

Recruit
Messages
11
hi, dont u think henry if we get 66 we should sell the pair usd/cad and at 6O we should buy the pair...... a bit confused......may be i m wrong but this is what it should be...... or may it its typing error in the heading.
 
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gunner12

Recruit
Messages
9
ACTION: USD/CAD BUY 66.0 SELL 60.0

The Trade Plan contradicts the action above....

We'll look to BUY USDCAD if we get 60.0 or less, and we'll look to SELL USDCAD if we get 66.0 or better.

Which is it ....BUY 66.0 or better and SELL 60.0 or less?
 

DumbAsArock

Private, 1st Class
Messages
32
Henry made an error in the bold title (he is human, after all), but he typed the correct entry in the body of the text:

"We'll look to BUY USDCAD if we get 60.0 or less, and we'll look to SELL USDCAD if we get 66.0 or better. I'll be using Retracement Trading method."

It wasn't much of a retracement, but still...it worked.

Thanks, Henry.
 
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