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Forex Trading Signal 08/06/09

Discussion in 'Current Forex Trading Signals' started by Crazy Cat, Aug 6, 2009.

  1. Crazy Cat

    Crazy Cat Former FPA Special Consultant

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    Hey folks,

    After all the dust from Wednesday's news has settled, we had some pretty decent trades. UK PMI Services came out tradably high, and luckily UK Industrial production that came out 2 minutes later helped it along as well combining for about a 50 pip move. As I often highlight, a trend blowoff the the GBP/USD shortly after 0430 news is quite common, and with a rally into psychological resistance around 1.7000, we saw a reversal after the rally... so you really could have played it in either direction. US ISM Non-Manf numbers came out almost low enough to hit our sell triggers, but not quite. We still saw a 80 pip drop on EUR/JPY in 20 minutes, so not bad. NZ unemployment rate came out high hitting our trigger, but with a conflict on the employment change number, I recommended a quick close for small profits which worked out best for the small 21 pip move we saw. AU Employment change was a blockbuster 50K above expectations with unemployment rate helping, but we only managed a 36 pip rally into resistance.

    For trends, I'm going to mostly reprint what I said in yesterday's signal: As far as the trends are concerned out there, I'm starting to bias short as of Tuesday looking for a turnaround south soon on the EUR/USD, GBP/USD, Stocks and Silver and have discussed some position trades short related to that turnaround. For a more in depth look at them, look at Tuesday's 8-4 signal video. Today's writeup is focused more on the news.

    In news Thursday we have primarily speech and text based opportunities that are tough for newbies to trade, but with experience and a news platform, or by trading with a trusted service like the Diamonds room I run, they can provide some great trades. I'll try my best here to preview them and highlight the main concerns that the market will likely focus on:

    0700 UK Interest Rate Decision (no change at 0.50% expected) - The BoE has run through it's 125 billion pound Asset Purchase Facility (APF) and there is speculation that they will either extend the program or halt it altogether. With some economic improvements in the UK, the market is anticipating a potential halt to the money printing which would be GBP bullish.
    If they hike rates at all, GBP/USD will rally 80+ pips.
    If they cut rates at all, GBP/USD will sell off 100+ pips.
    If they stop or temporarily suspend their APF (aka money printing) GBP/USD should rally 40-50 pips.
    If they extend or restart the APF with another 25 billion pounds or more, GBP/USD should fall 50+ pips.

    0745 ECB Interest Rate Decision (no change at 1.0% expected) - Very small chance of any surprise here, but if it happens, it would be big.
    If they hike rates at all, EUR/USD will rally 70+ pips.
    If they cut rates at all, EUR/USD will sell off 90+ pips.

    0830 ECB Trichet's Post Interest Rate Speech (neutral tone expected) - Trichet is expected to pitch a "wait and see" approach keeping rates steady at 1% for awhile longer before hinting at any hikes. Chances are the price action will follow a whipsaw-like flow tracking each of his main comments while he speaks and does his Q&A. A typical Trichet speech will start dovish (EU down), qualify with hawkish comments (EU up), reiterate dovish concerns (EU down), then get into something meaty in either direction like increased growth outlook or diminishing downside risks (EU up), or provide a more sobering view on the problems facing the Eurozone (EU down). Any comments on their bond purchases will be bullish EU if they're reducing or stopping them, and bearish on the EU if they're expanding the program.

    2130 AU Monetary Policy Report - The RBA marked a shift towards a slightly more hawkish policy stance with Tuesday's statement. Traders will be looking to the reports for details on the extent of their shift to try to price in when the RBA may end up raising rates. They're expected to lift their GBP forecasts, but the wild card are their inflation forecasts. If the annual inflation forecast ends up in the 2-3% range, that would likely be AUD/USD bullish since that would remove the low inflation that was a previously cited reason for holding rates low and maybe cutting further. Basically the market is now expecting a rate hike in either November or December, and they'll be looking at this report to see if a hike even sooner is possible, or perhaps it may be held off until 2010.

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