Profit Mongers @ 6:40 AM, Thursday December 16 2010
Two reports for the US Session today:
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0830 Housing Starts m/m (550k expected, 519k prior, 520k to 595k range)
Affliated Reports at 8:30:
US Building Permits m/m (560k expected, 552k prior, 540k to 585k range)
US Initial Jobless Claims (425k expected, 421k prior, 405k to 435k range)
US Continuing Claims (4115k expected, 4086k prior, 4000k to 4200k range)
US Current Account Balance (-126B expected, -123.28B prior, -132B to -115B range)
This used to be a good trade a few years ago when the housing crash lead the broader economy into a recession. However Housing in the USA has been bottoming out for sometime now, lingering in the 500-600k range since Jan 2009. Last month a deviation of 90k did cause a 20 pip spike on the USDJPY and after retracing a 40 pip move over 1 hour was achieved, however the CPI figures came out at the same time. The weekly Jobless numbers come out at the same time and these also were for a time in focus and are capable of producing trading opportunities. Deviations of as low as +/-25 were good on the IJC number but at this point look for deviations of more like +/-50 on IJC and +/-75 on Continuing Claims.
I would not recommend a spike trading this report, as there are too many numbers at once which report unrelated economic factors and thus a good chance for conflict. Instead look for all of the numbers to line up. ie higher Housing Number and Lower IJC & CC numbers (also higher Trade Balance) would paint a good picture for the US economy and the USDJPY should rally a bit, and even if there is a fast initial reaction there should be time to get in on a pullback for a move on USDJPY toward the key 85.00 level. Lower Housing Starts, Building Permits & Trade Balance with higher IJC & CC should see USDJPY head towards 83.50 to 83.00
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1000 US Philly Fed (15 expected, 22.5 prior, 5.0 to 20.5)
Last month a +17.5 deviation blasted the USDJPY up 30 pips in 3 minutes, after about a 38% retracement after 7 minutes the USDJPY once again turned higher and moved up another 30-35 pips. In August a -14.7 deviation caused a 35 pip move, but then chopped sidewise for the next 45 minutes although scalps off the fibs of the initial news release spike were still good for 10-15 pips. These represent the larger deviations where spike trading is definately worthwhile, October and September were basically flat, but in July a more modest deviation of -4.9 did caused an 18 pip spike but then a more gradual sell-off
--If it comes out at 5.0 or higher, USD/JPY should rally about 20 pips.
--If it comes out at -5.0 or lower, USD/JPY should fall about 20 pips.
--If it comes out at 10.0 or higher, USD/JPY should rally about 35 pips.
--If it comes out at -10.0 or lower, USD/JPY should fall about 35 pips.
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May the Pips be with you,
Magister Pips
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