Profit Mongers @ 6:12 AM, Tuesday January 03 2012
1000 US ISM Manufacturing Index (53.4 expected, 52.7 prior, 50.0 to 56.0 range) 52-54 most
Last month a +0.9* and the Yen crosses (CADJPY,EURJPY,GBPJPY) all gained about 20-40 pips.
However the month before in November with a -1.2* deviation the CADJPY actually only just briefly
blipped down 15-20 pips in the 1st minute but then immediately turned right around and promptly
rallied. Thus this one can be unreliable, even more so in light volume post-holiday trading. Basically
as long as this figure can stay above 50 it is still good especially when these same figures for European
economies are quite substantially below this key expansion/contraction number. The lower end of
the suggested deviation trigger to use is around +/-2.1 while more conservative trigger would be
+/-3.5, but a good guid here is to look at the range of estimates. Most estimates are between 52 and
54 with only 1 estimate below 52 at 50.0 and only 2 estimates above 54.0 at 54.5 and 56.0 respectably.
This would imply a buy trigger of +2.6 and a sell trigger of -3.4. The dynamic in the market has been
all about aggressive blow-out of stops, both the early buyers and now as the new year starts tripping out
the sellers. Aussie targeting the December 1.0380 high as events in the Gulf bring a bid in Crude which
in tern lifts other risky assets including the battered Euro, and Gold finds bids after tripping out the Sept.26th
lows...it all looks risk on as the US players return from New Years weekend. Reversal or Continuation?
There could be an opportunity to buy into the trend on a slightly lower deviation which bring a quick small
spike down, but is not low enough to panic the market. EURJPY might be a canidate as it dips and holds
some time below the big century 100.0 but now regains...but commodity currencies are more in tune with
the risk-on bid brought on from Crude-Gulf situation.
if 56.0 or higher then buy CAD/GBP/AUD-JPY, for a potential 30-50 pip move
if 50.0 or lower then sell EUR/GBP-JPY for a potential 30-50 pip move
*FPA has got their numbers messed up - source Bloomberg
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