Profit Mongers @ 7:31 AM, Thursday January 20 2011
Hello Traders,
Some IT issues so signal did show up here. Small deviation on UK Claimant Count Change, did its usual 20 pip blip. New Zealand CPI missed the deviation but still moved down quite a bit on a -0.1. Here is the news for Thursday.
1000 US Philly Fed (20.8 expected, 24.3 prior, 12.5 TO 25.0 range)
A big deviation in November of +17.5 caused a 30 pip spike on USDJPY and about 4 points on the Emini S&P500 Future (16 ticks), the USDJPY did continue up for an additional 30 pips over the next hour, while the ES Contract another 4-5 points (16-20 ticks). This USDCHF had a smaller initial spike but the follow thru was very good for 120 pips over the same hour, while move on the eurusd was down but more choppy. Probably best to focus on USDJPY, USDCHF or EMini S&P. December's +9.3 deviation did move the USDJPY about 20-25 pips, and the last larger deviation was back in August where a -14.7 where this caused a 35-40 pip spike down in USDJPY but there was no continuation and the pair started to chop after the spike, then reversed. Although a -4.9 dev in July did cause a 40 pip move on USDJPY, after last month's reaction it is better to wait for a larger type of deviation, this is much more reliable. However the last time this indicator got into the low 30's was in 2004.
--If it comes out at 32.0 or higher, USD/JPY should rally about 30 pips.
--If it comes out at 8.8 or lower, USD/JPY should fall about 30 pips.
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1645 NZ Retail Sales m/m (1.2% expected, -2.5 previous, 0.0% to 2.1% range)
Affliated Reports:
NZ Core Retail Sales (0.5% expected, -1.6 previous, 0.0% to 1.0% range)
This report produces some nice spikes. The time of day can be an issue in terms of liquidity, as it occurs after the US markets close and is very close the 5pm rollover. Despite last months negative deviation of -1.7, which caused a 45 pip spike, the numbers are predicted to be higher this month. Retail Sales is a volatile indicator and tend to have positive and negative devations as the months pass. The higher deviation in November occurred on a Sunday evening 15 minute before the official 5pm EST open, so it is hard to count this although the chart indicate the NZDUSD did gap up on the open. Even October's -0.3 deviation caused a 40 pip spike. Of course it is best if the deviation on the main headline figure is in the same direction as any deviation on the Core figure, but that is usually the case, and if they deviate in different directions the trigger is usually not hit. Only back in March was there a +0.3 on headline while a -0.4 occurred on Core, therefore a deviation of +/-0.5 should be safe for this one, there might be a move on a smaller deviation but the risk of a conflict is higher.
If it comes out at -1.7% or higher, NZD/USD should rally 30+ pips
If it comes out at -0.7% or lower, NZD/USD should fall 30+ pips
Happy Pipping,
Magister Pips
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