Fundamental Analysis for Friday 06/08/10
7:00am CA Employment Change 14K(E) 93.2K(P) 30K(S) 50M
8:30am US NFP Employment -63K(E) -125K(P) 70K(S) 70M
E = Expected Release Figure
P = Previous Release Figure
S = Deviation or Surprise Factor
M = Expected Movement In Pips (if deviation is hit)
NEWS TRADING
Friday, August 6 2010
[7:00am NY Time]
We'll be getting the Canadian Employment Change release number
tomorrow, here is the forecast:
CA Employment Change Forecast 14K Previous 93.2K
(Unemployment Rate 7.9%)
ACTION: BUY -15K SELL 45K USD/CAD
The Trade Plan
Canadian Employment Change report will be release at 7:00am sharp
today, and it's the first of two tradable high impact news releases
for this Friday. What I am looking for is a minimum deviation of
30K, or the difference between the Forecast number (14K) versus the
actual release number; therefore if we get a positive 45K of
release, we should see demand for the CAD rise, therefore we should
SELL USD/CAD; however, if we get a negative number, such as -15K or
worse, we should see some weakness in the CAD, and that will be my
cue to BUY USD/CAD pair.
I'll also pay close attention to the unemployment rate, which stands
at 7.9%, same forecast as last month's release. As long as this
number does not conflict with the Employment Changes, we should
follow the direction of the news release. If we get a conflict, such
as better Employment Changes but higher Unemployment Rate, then
we'll need to look at the context of the market before take the
trade.
[8:30am NY Time]
We'll be trading the US NFP (Nonfarm Payroll) Employment Changes, it
is the most volatile news release for the week as traders and their
cousins all sit around in front of their PCs preparing to jump in...
Here's the forecast:
US NFP Forecast -63K Previous -125K
Unemployment Rate Forecast 9.6% Previous 9.5%
ACTION: USD/JPY BUY +1K SELL -140K
The Trade Plan
With today's release, as per a special report by Bloomberg, the
expectation ranges from -30K to +130K, counting on an increase in
the private sector payrolls estimated at +90K versus the 83K release
in June. This number has been revised up slightly just after ADP's
report released earlier this week, which came out at a 42K versus an
estimate of 38K.
Of course, the Unemployment Rate will be another important figure
today as it is expected to rise to 9.6% from 9.5% in June. I believe
that in the event we get a conflict of releases, such as a better
NFP figure but worse Unemployment Rate, market will react more to
the Unemployment rate if both releases show large deviations,
especially if it's above the psychological 10.0% level.
Considering some degree of consolidation that we saw during
Thursday's trading session after ECB Trichet's cautious speech, JPY
could fall under the old "Buy on Rumor, Sell on News" effect against
USD if we were to get an as expected release, or -63K; therefore,
I'd lean towards selling JPY (BUY USD/JPY) if both NFP and
Unemployment Rate come out close to expectation...
However, if we get a significantly lower release on the NFP (-140K)
and Unemployment Rate, I'd be looking to BUY JPY on a retracement.
There might be a chance to go LONG on GBP/USD or EUR/USD as another
disappointing NFP release could mean a bearish trend is developing
as traders may SELL USD on the perception of a possible slowdown in
U.S. economic recovery or double dip recession. But this movement
may be delayed as the initial market movement will be focused on
strong JPY, which will in turn drive all other major crosses lower.
On the other hand, if we get a positive NFP release (+1K) and the
Unemployment Rate remains at 9.6% or at 9.5% unchanged level since
last release, JPY should weaken immediately as USD/JPY may recover
and move above 87 or possibly 88 throughout the trading session,
eventually head back on to 90 in the next few weeks... This could
potentially turn into a long-term trade as other JPY crosses may
provide much better profit level (GBP/JPY for instance).
If we get a conflict release, we will wait and see how the market
reacts first. If there is an overwhelming sentiment driving the
market, there will be plenty of opportunities for entry. If you just
wait for 5 minutes before making an entry, you'll get a much clearer
view.
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Fundamental Analysis for August 05, 2010.
Fundamental Analysis uses financial and ordinary news to predict the movement of the Foreign Exchange market, we analyze it using the best FOREX trainers and traders before the event. Our Analysis for today is.
7:00am UK BOE Interest Rate 0.50%(E) 0.50%(P) 0.25%(S) 50M
7:45am EU ECB Interest Rate 1.00%(E) 1.00%(P) 0.25%(S) 50M
...and an untradable release...
8:30am EU Trichet Press Conference
E = Expected Release Figure
P = Previous Release Figure
S = Deviation or Surprise Factor
M = Expected Movement In Pips (if deviation is hit)
***
Thursday, August 5 2010
[7:00am NY Time]
BOE (Bank of England) will be rendering its interest rate decision
today, and it should provide strong volatility in the market if
BOE's final decision is a surprise, here's the forecast:
UK Offcial Bank Rate Forecast 0.50% Previous 0.50%
ACTION: GBP/USD BUY 0.75%
The Trade Plan
In the unlikely event BOE hikes rate to 0.75%, we'll buy GBP/USD
immediately on a spike trade. Because of the level of this surprise,
I think we'll see a strong trend change for GBP in the next few
weeks, so we should BUY and keep a small portion for larger gains...
[7:45am NY Time]
ECB (European Central Bank) will be rendering its rate decision
today, it is widely believed that ECB will keep current rate
unchanged. Here's the forecast:
EU ECB Rate Decision Forecast 1.00% Previous 1.00%
ACTION: EUR/USD N/A
The Trade Plan
ECB rate decision comes in two part, the first one is the 7:45am
rate announcement followed by the 8:30am Press Conference where ECB
chief Trichet issues the official statement on this rate decision.
Since it is extremely unlikely to get a surprise from ECB, there is
usually no volatility following this release, we should focus on the
actual Trichet's speech in 45 minutes.
For more detailed analysis, please go to:
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