Todays FX Trading Strategy
So let's review what happened yesterday. We were watching two things. We were watching the UK BOE minutes, and the U.S. core CPI. Here is what happened...
On the BOE minutes, it was expected that the decision to keep rates unchanged in October was unanimous, so 9:0. However, when we saw the actual minutes, we saw that the vote was 7:2, which meant that 2 out of 9 members wanted to hike the rate back then, which again reinforced the fact that UK will be hiking rates in November. GBP/USD strengthened by about 20 pips, The reason the pound didn't strengthen much more than that was mostly because UK unemployment check claims came out higher than previous month, and average earning number came out lower than expected.
Then we had the UK core CPI, which came out exactly as expected. At the same time, the headline CPI number came out slightly worse than expected, which housing starts came out quite a bit better than expected, and even better than last month. The market was indecisive for quite a few minutes, staying within a range of 5 to 10 pips, which is very strange, it usually picks a strong direction after CPI numbers, but not this time. And then we saw the dollar strengthen based on the housing numbers mostly, so we saw GBP/USD drop by about 40 pips or so. I didn't take this trade...too risky going against the general GBP/USD up-trend, while U.S. CPI came out in-line, and even a little less than expected on headline number.
Here is what's happening today.
1. October 18th, 2006 (4:30 am New York Time) UK
We have monthly retail sales coming out of UK. Expected number is around 0.3% or 0.4%. If the number comes out at 0.6% or higher, I may possibly go long on GBP/USD. If it comes out at 0% or negative, I may possibly go short on GBP/USD. This particular report is usually good for about 30 pips, however it will depend where the GBP/USD is before the report. If it still hangs around the 8670s area, like it is now, we may get a much bigger move to the upside.
2. October 18th, 2006 (12:00 pm New York Time) USA
We have monthly Philadelphia Fed Survey number coming out. This is not the most important report in the world, but if it deviates by a lot, we may get a 20-30 pips move out of it. Expected number is at 7. If the number comes out negative, I may possibly go long on GBP/USD. If the number comes out at 15 or above, I may possibly go short on GBP/USD. Again, be careful with this report, get ready to exit fast, if it creates a move, it might be a short term move.
On the BOE minutes, it was expected that the decision to keep rates unchanged in October was unanimous, so 9:0. However, when we saw the actual minutes, we saw that the vote was 7:2, which meant that 2 out of 9 members wanted to hike the rate back then, which again reinforced the fact that UK will be hiking rates in November. GBP/USD strengthened by about 20 pips, The reason the pound didn't strengthen much more than that was mostly because UK unemployment check claims came out higher than previous month, and average earning number came out lower than expected.
Then we had the UK core CPI, which came out exactly as expected. At the same time, the headline CPI number came out slightly worse than expected, which housing starts came out quite a bit better than expected, and even better than last month. The market was indecisive for quite a few minutes, staying within a range of 5 to 10 pips, which is very strange, it usually picks a strong direction after CPI numbers, but not this time. And then we saw the dollar strengthen based on the housing numbers mostly, so we saw GBP/USD drop by about 40 pips or so. I didn't take this trade...too risky going against the general GBP/USD up-trend, while U.S. CPI came out in-line, and even a little less than expected on headline number.
Here is what's happening today.
1. October 18th, 2006 (4:30 am New York Time) UK
We have monthly retail sales coming out of UK. Expected number is around 0.3% or 0.4%. If the number comes out at 0.6% or higher, I may possibly go long on GBP/USD. If it comes out at 0% or negative, I may possibly go short on GBP/USD. This particular report is usually good for about 30 pips, however it will depend where the GBP/USD is before the report. If it still hangs around the 8670s area, like it is now, we may get a much bigger move to the upside.
2. October 18th, 2006 (12:00 pm New York Time) USA
We have monthly Philadelphia Fed Survey number coming out. This is not the most important report in the world, but if it deviates by a lot, we may get a 20-30 pips move out of it. Expected number is at 7. If the number comes out negative, I may possibly go long on GBP/USD. If the number comes out at 15 or above, I may possibly go short on GBP/USD. Again, be careful with this report, get ready to exit fast, if it creates a move, it might be a short term move.
posted by Naveen Pantera at 9:06 PM
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