Todays FX Trading Signals
Nothing happened earlier today, Bernanke didn't say anything pertaining to the U.S. monetary policy. The market was pretty dead, I think everybody is waiting for the CPI numbers from various countries this week, in order to be more certain on the market direction.
We have a few interesting reports coming out today that I will be watching and possibly trading.
1. Tuesday, October 17th, 2006 (4:30 am New York Time) UK We have UK CPI coming out. This number becomes especially important this month, because 90% of economists are expecting UK to do another interest rate hike in November, which would bring UK interest rates from current 4.75% to 5.00%. Expected monthly CPI number is 0.1%. Any negative number would signify that the economy is cooling off, which may cause the government to rethink the hike, and would possibly be bad for GBP/USD. So if the number comes out at -0.1% or more negative, I may possibly go short on GBP/USD. If the number comes out at 0.3% or higher, it should be good for the pound, so I may possibly go long on GBP/USD. If my triggers get hit, I am expecting a move in the GBP/USD of at least 50 pips.
2. Tuesday, October 17th, 2006 (8:30 am New York Time) USA
We have PPI coming out of the U.S. We have the regular headline number, and we have the number, less food and energy, which is the core number. The core number is expected to come out at 0.2%. If it comes out at -0.3% or more negative, it would be bad for the dollar, so I may possibly go long on GBP/USD. If the core comes out at 0.7% or higher, it would be good for the dollar, so I may possibly go short on GBP/USD. I would be extra careful trading this report, even if my triggers get hit, especially if the number is conflicting the UK CPI number earlier. Catch as much as you can on the spike, and exit as soon as you start seeing considerable retracement.
3. Tuesday, October 17th, 2006 (8:30 am New York Time) CANADA
We have Interest Rate decision coming out of Canada. Currently the Canadian interest rate is at 4.25%. It's expected to stay unchanged. If for some reason it's hiked to 4.50% or more, it would be a nice possible sell on USD/CAD. If it gets cut to 4% or less, it would be a good possible buy on USD/CAD. But again, that's just day dreaming. 99% is that they'll keep it where it is. What's more important is the comments accompanying the interest rate statement. If they say something about possibly doing another rate hike in the next few months, that would be a possibly good short on USD/CAD, probably worth at least 50 pips. If they give some confirmative answer that there will be no more rate hikes, or that they may start possibly cutting the rates, that would be a good long on USD/CAD, possibly worth at least 50 pips as well.
4. Tuesday, October 17th, 2006 (9:00 am New York Time) USA
We have TIC report coming out of the U.S. TIC stands for Treasury International Capital. This report is expected to come out at around 55 billion or so. My trigger would be 25 billion either direction. So if the number comes out at 75 billion or more, I would possibly go short on GBP/USD. If the number comes out at 30 billion or less, I may possibly go long on GBP/USD. Again, be extra careful on this report, especially if it comes out against the general trend, established by the UK CPI number. Look to grab as much as you can from the initial spike, and if you start seeing strong price move in the opposite direction, just get out.
We have a few interesting reports coming out today that I will be watching and possibly trading.
1. Tuesday, October 17th, 2006 (4:30 am New York Time) UK We have UK CPI coming out. This number becomes especially important this month, because 90% of economists are expecting UK to do another interest rate hike in November, which would bring UK interest rates from current 4.75% to 5.00%. Expected monthly CPI number is 0.1%. Any negative number would signify that the economy is cooling off, which may cause the government to rethink the hike, and would possibly be bad for GBP/USD. So if the number comes out at -0.1% or more negative, I may possibly go short on GBP/USD. If the number comes out at 0.3% or higher, it should be good for the pound, so I may possibly go long on GBP/USD. If my triggers get hit, I am expecting a move in the GBP/USD of at least 50 pips.
2. Tuesday, October 17th, 2006 (8:30 am New York Time) USA
We have PPI coming out of the U.S. We have the regular headline number, and we have the number, less food and energy, which is the core number. The core number is expected to come out at 0.2%. If it comes out at -0.3% or more negative, it would be bad for the dollar, so I may possibly go long on GBP/USD. If the core comes out at 0.7% or higher, it would be good for the dollar, so I may possibly go short on GBP/USD. I would be extra careful trading this report, even if my triggers get hit, especially if the number is conflicting the UK CPI number earlier. Catch as much as you can on the spike, and exit as soon as you start seeing considerable retracement.
3. Tuesday, October 17th, 2006 (8:30 am New York Time) CANADA
We have Interest Rate decision coming out of Canada. Currently the Canadian interest rate is at 4.25%. It's expected to stay unchanged. If for some reason it's hiked to 4.50% or more, it would be a nice possible sell on USD/CAD. If it gets cut to 4% or less, it would be a good possible buy on USD/CAD. But again, that's just day dreaming. 99% is that they'll keep it where it is. What's more important is the comments accompanying the interest rate statement. If they say something about possibly doing another rate hike in the next few months, that would be a possibly good short on USD/CAD, probably worth at least 50 pips. If they give some confirmative answer that there will be no more rate hikes, or that they may start possibly cutting the rates, that would be a good long on USD/CAD, possibly worth at least 50 pips as well.
4. Tuesday, October 17th, 2006 (9:00 am New York Time) USA
We have TIC report coming out of the U.S. TIC stands for Treasury International Capital. This report is expected to come out at around 55 billion or so. My trigger would be 25 billion either direction. So if the number comes out at 75 billion or more, I would possibly go short on GBP/USD. If the number comes out at 30 billion or less, I may possibly go long on GBP/USD. Again, be extra careful on this report, especially if it comes out against the general trend, established by the UK CPI number. Look to grab as much as you can from the initial spike, and if you start seeing strong price move in the opposite direction, just get out.
posted by Naveen Pantera at 9:00 PM
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