Profit Mongers @ 11:38 AM, Monday December 13 2010
Just 1 economic release to trade today:
1645 NZ Retail Sales m/m (Headline -0.8% expected)
- Headline Range of estimates : -1.6 to +0.8
- Core Retail Sales -1.0 expected
- Core Range of estimates : -2.0 to +0.5
-Retail Sales is normally a very volitile economic indicator, however this month sees the average estimate move to a negative number again. Last time this happened was back in June. Bollard last week during the Interest Rate statement did lower growth forecasts and mentioned the slowing property market, a slowing property market could indicate consumers with less to spend. Certainly most of the analyst's expect a lower figure, except JP Morgan, despite it being Christmas and consumers traditionally spending on presents, meals, etc.
- This trade does occur just 15 minute before the market rolls over for the day, some ECN's might go ofline some 10-15 minutes after the release to do interest calculations, so liquidity conditions could be difficult, already we have seen the market start to thin out as the Christmas period approaches. If a trade opportunity does occur, probably best to use a fixed spread broker.
- Last month this one was released on a Sunday night before the 5pm EST Open. It was a +0.5 deviation higher and price did move up but some 30-40 pips before reversing as the market got up and running. The 3 previous releases have seen +/- 0.3-0.4 deviations producing decent spike trades. October's -0.3 dev caused a 35 pip spike and did retrace for a possible 10-15 pip scalp but eventually reversed back up some 2 hours later. September's -0.4 also provided a good 50-61% retracement after an initial 30 pip spike, but in this case price continued to grind down thru-out the asian session for a possible 20-50 pips depending how long you held it. In August a +0.4 deviation caused a similar 30 pip spike but in this case there was no retracement and price then continued for another +20 pips, some hours later it did retrace to a good level and then continued up another 50 pips.
Based on the performance of the past few months, I would be consider using +/-0.4 triggers on the headline figure, where we have used +/-0.5 in the past. Even a +/-0.3 can work for a spike like in October, but the tighter the trigger on headline, the more the chance for a conflict on the Core number, also not really enough for an afterspike opportunity.
If it comes out at -0.4% or higher, NZD/USD should rally 30+ pips.
If it comes out at -1.2% or lower, NZD/USD should fall 30+ pips
May the Pips be with you,
Magister Pips
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