1000 US ISM Non-Manufacturing Index (53.8 exp, 52.9 prior, 51.5 to 55.0 range)
Last month a -0.6* didn't cause much movement other than choppy sidewise action. There was
a bit of a drop in the USDJPY a minute before the release..perhaps a rumor or leak, but this
retraced as soon as the news was out. Perhaps some expected it to be much lower. Anyhow
certainly in the current environment just for these PMI figures to come out above the critical
contraction/expansion number of 50 is good news. The CADJPY did response better to this small
deviation, dropping about 35 pips over 4 minutes after the release. It then did retrace back
up but it was more than just a quick blip down. EURJPY & GBPJPY also eased down in the 5 min
after the release but just 10-15 pips but had quite smooth uptrends when things then did turn
around. The small +0.2** did actually also respond well, the USDJPY up a few pips and CADJPY
even +15 over 3-5 minutes, price then eased down for 15 minutes but then then build up and
rally again. The most recent large deviation was in September when a +2.3. The USDJPY and
CADJPY spiked very briefly and then had quite significant sell offs. USDJPY just moved up a
few pips but the CADJPY spiked about 25 or so. This lasted 1 minute and then there was about
10 minutes of consolidation as the pair came back to gradually to its pre-release price. But
then even this broke and over the next half hour further downward pressure grew to the point
where it was 50 pips below the spike high caused by the news. So a big deviation and only a
modest spike with no continuation and in fact quite a sell-off. After 45 minutes thou things
then did turn around again and rally above the pre-release, above the initial spike high and
higher. Indeed quite a fake out!! Now since that good deviation we have seen pretty good
responses to small deviations, so what can we do. This depends on what kind of slippage
control and execution speed but if you can profit on a 20-30 pip spike which is quick and could
reverse then you could trade +/-2.0 triggers, even +/-1.5 if you use your nominal trigger to
just trade a small amount of lots. Otherwise triggers of +/-2.5 to +/-3.0 are advised. Also
you could skip the spike or trade it with small size of lots and wait for price action to confirm
some sort of afterspike trade.
if 57.5 or higher then buy USDJPY for a potential 30-50 pip move, or buy Yen Cross or EMini
if 56.3 or higher then buy USDJPY for a potential 20-35 pip move, or buy Yen Cross or EMini
if 51.3 or lower then sell USDJPY for a potential 20-35 pip move, or sell Yen Cross or EMini
if 50 or lower then sell USDJPY for a potential 30-50 pip move, or sell Yen Cross or EMini
* FPA is reporting a 52.9 vs 53.9 expected, but Bloomberg says 52.9 versus 53.5 expected
** FPA has +0.3 but expected figure was 52.8 not 52.7
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