Forex Trading Signal 12/24/08

Crazy Cat

Former FPA Special Consultant
Merry Christmas Eve everyone,

at 0430 UK GDP q/q came in 0.1 lower than expected, missing our trigger, but it did give some gradual downside to the GBP which was reassuring.

at 0830 US GDP came out as expected so no trade there

at 1000 US EHS came in MUCH lower than expected which should have given the USD/JPY some downside, but like I told the Diamonds room, the USD/JPY just "wanted" to rally at the time. What I mean by that is that there was obvious technical buying pressure on the pair. We tried a short but were quick to exit with just a couple of pips and indeed, the USD/JPY rallied quite a bit in the hours after.

For tomorrow Wednesday 12-24 we have the last news release of the week:

0830 EST We have a plethora of data out of the US. Durable Goods Ex-Transportation (core), Personal Income, Personal Spending, Core PCE, Initial Jobless Claims, and even Canada GDP m/m. There's no simple triggers to set here that will survive a conflict, so it's important to look at the sentiment in the market and the preponderance of the deviations to really gauge how currencies will be affected. After watching the price action today, I'm going to focus more on EUR/JPY than USD/JPY on the US news. Here's my plan:

Lately, carry trades and the USD have been selling off before the news, then even if the news is horrible, recovering afterwards as people take profits. So, I plan to short either EUR/JPY or USD/JPY (whichever looks best) sometime in between 0745-0815 EST. I'll likely close this short just before the 0830 news. Then after the release as long as it's not completely abysmal, I'll look to get in long for a scalp.

Personal Income or Spending deviating by +/- 0.5% from expected is significant
Durable Goods Ex Transport deviating by +/- 2.0% is significant
Initial Jobless Claims deviating by +/- 40K is significant (High is bad, low is good)
CAD GDP m/m deviating by 0.4% is significant, but will likely be ignored.

Just that one 0830 trade tomorrow. Good luck with it. Have a Merry Christmas folks (that's right, I'm not afraid to say the C word =P)

-Sir Pipsalot