0430 UK Industrial Production m/m (1.1% expected, -1.7% prior, 0.2% to 1.8% range)
Affliated Reports:
UK Industrial Production y/y (-0.5% expected, -1.2% prior, -1.1% to 2.7% range)
UK Manufacturing Production m/m (1.0% expected, -1.5% prior, 0.0% to 1.9%)
UK Manufacturing Production y/y (2.1% expected, 1.3% prior, 1.4% to 3.0%)
The British Pound continues to be sensitive to news. This one can be a good trade
but last month there was not a good reaction. The release occurred at the same time
as the PPI inflation numbers so when industrial production came out low the high
inflation kept the market up. However a similar deviation in April of -1.6 caused
a 55 pip drop in the 1st minute, extending another 25 pips down over 20 minutes
before pulling back for a few hours, but making a new low into early new york session.
This indicator has moved on even smaller devs, like in May a -0.5 deviation caused an
initial 30 pip move, but after a small pullback continued down for another 20 pips,
even retracing 78% after 45 minute for a longer term swing trade making a new low in
early ny session. We have traded +/-0.8 before and aggressive traders might use that
with smaller lots if they can control slippage, but because of last month it is safer
to widen this out
If it comes out at 2.3% or higher, GBP/USD should rally 30-50 pips
If it comes out at -0.1% or lower, GBP/USD should drop 30-50 pips
*********************************
0700 UK Interest Rate Decision - (unanimous to hold at 0.5%)
Affliated Reports:
UK Asset Purchase Facility (unanimous to hold at 200B)
All 51 of the analysts polled by Bloomberg predict that the BOE will
again hold off changing rates, and all 32 of the analyst polled think
the BOE will keep the Asset Purchase Target (QE) steady at £200B.
Rates have not changed since March 2009. Inflation continues to be
above target in the UK, and growth sluggish. EArlier this week the
important Services PMI did come out slightly higher, but there had
been worry this would add to some negative readings on other indicators
seen on cable in recent weeks, such as last week's manufacturing PMI.
Final GDP for Q1 came in as expected, the market will be looking out
for the Preliminary reading for Q2 coming in a few weeks to get a
better gauge on growth. Expectations of the next hike have moved from
sometime late in 2011 out to 2012. Sterling has experience alot of
weakness versus many other currencies.
If they hike, GBPUSD will go up over 100 pips
If the cut, GBPUSD will go down over 100 pips
if they raise APF by 25B, GBPUSD should drop 50-70 pips
if the cut APF by 25B, GBPUSD should go up 50-70 pips
***************************************
0745 ECB Interest Rate Decision - (unanimous to hike to 1.50%)
0830 ECB Press Conference - (Possibility for pause to be declared)
All 55 analysts polled by Bloomberg expect the ECB to hold for now.
There could be some strength if the hike goes thru as all analysts
expect, however going into the Press Conference we could see the ECB
to then give an indication of a pause. With the situation in the
periferal Eurozone members and a recent downtick in many PMI readings
for countries in the Eurozone it would be appropriate. Inflation has
ticked down a bit and commodities have eased somewhat, at least recently
there has been a pullback. The ECB has a single mandate to fight
inflation, however with the crisis in the EuroZone the ECB has been
pulled into the political debate. The must maintain their reputation.
They also hold alot of Greek Bonds and are expected to be asked during
today's Press Conference if they will continue to accept these Bonds
as colateral if Greece does default. The final definition of what a
default is seems to depend on the Ratings Agencies, as at the moment
there is a plan to do a roll-over with private sector participation.
The Euro has been weak since last week's big gains. It has bounced
off the 61% of last weeks move at 1.4285 but has not been able to hold
onto any gains above this level. The market is probably waiting to
see what will happen with this meeting first, then things could take
off. It could also get quite whippy as Trichet can say one thing
hawkish then turn around and say something dovish...like last month.
0745 Rate
If they hike as expected, EURUSD should go up 20-50 pips
If they hold, EURUSD will go down over 50-90 pips
0830 Statement
if they indicate a pause then EURUSD should sell off.
***********************************
0815 US ADP Employment (70k expected, 38k prior, +40k to +175k range)
Another blockbuster deviation on this indicator last month, a full -137 caused
a 50 pip drop over 10 minutes. The initial spike in the 1st minute was about
20 pips and then it continued, so there was ample opportunity for those who
got in on the spike or for anyone who entered after the number was sent thru
the wires. Price then went sideways until the 1 hour 15 minutes later when
it continued lower as the US stock market opened, which set the lows for the
day for a total 70 pip move. Be aware that the pip range on the USDJPY is
generally a bit less than other pairs, however it is the safest pair to trade
on US Data. Price retested the pre-release price by the asian open. In January
a similar situation happened witha full +197 deviation caused a 85 pip move in
15 minutes, and the strenth did continue another 30 pips all the way into the
start of the Asian Session. For a total of about 120 pips. Last months very
negative deviation did predict the lower deviation seen on the NFP release
2 days later, however the big positive deviation seen in January did not translate
into a higher reading for NFP. The smaller deviation on ADP haven't been worth
worrying about and although in the past a +/-50 deviation had a consistent enough
response to use as triggers, more recently price action seen on deviations of this
amount has not been consistent and wider triggers of +/-70 are advised.
Majority of expecations are from 40k-110k, with only 1 analyst above 140k
If it comes out at +140k or higher, USD/JPY should rally 40 pips.
If it comes out at +0k or lower, USD/JPY should drop 40 pips.
***********************************
1000 CAD Ivey PMI (67.5 expected, 69.1 prior, 55.4 to 72.0 range)
Last months +9.1 had little reaction, in fact the CAD weakened a bit.
May's -7.5 had little initial reaction, until about some 45 minutes
after the release when the USDCAD shot up 60 pips. Quite ackward and sudden
volatility, still lately it has been better to wait for a larger deviation.
Also April's +8.2 deviation has only a small reaction, moving only about
20 pips over 45 minutes. In the past a +/-8 deviation on this would be enough
to get a decent move on this release. The move doesn't always make the best
initial spike but can start a gradual move which can continue for 30 minutes
to an hour. Because of these releases it is best to stay out until a larger
deviation of +/-12. You can use the weapon to try an optimise entry on a larger
deviation but a gradual move should develop, so there is the option to wait for
the number to come out and observe price action to see if it is following the news,
especially on the smaller deviations. This one is has a high expectation so
not sure how much higher it can go, so possibly a tighter deviation on the upside
could work.
If it comes out at 77.0 or higher, USD/CAD should sell off 20-40 pips
If it comes out at 55.0 or lower, USD/CAD should rally 20-40 pips
Visit Profit Mongers website and check out our live trading room!