FX Trading Signals for Jan 11
1. Thursday, January 11th, 2007 (4:30 am New York Time) UK
We have Industrial Production coming out of UK, which basically measures both industrial and manufacturing activity in the UK. This report has been coming out very predictably since June of this year, at 0% to 0.1%. However, last month, it shocked everyone after the reading came out at -0.8%. That was the lowest month over month reading since March. So consensus for tomorrow is kind of all over the place. The question stands...was last month's number a fluke, and now we'll have a big upside surprise? Or was last month's number valid and we'll have minimal recovery? Most economists are expecting a recovery to either 0.2% to 0.3%. If the number comes out at 0.6% or higher, it would mean that last month's number was more or less a fluke, and the Industrial Production in the UK is still going strong, and GBP/USD may possibly increase by 30 pips or more. If the number comes out flat, or 0% or lower, that would mean that even after such huge drop last month, this month there was no recovery, so it would signify a weakening industrial section in the UK, and GBP/USD may possibly decrease by 30 pips or more. Just watch out for any big conflicts on the Manufacturing Production.
2. Thursday, January 11th, 2007 (7:00 am New York Time) UK
We have interest rate decision coming out of UK. Expectations are that they'll keep the rate unchanged at 5%. There is pretty much 99.99% chance that they will keep the rates unchanged and it will be a no trade. However, if for some reason the rate is hiked to 5.25% unexpectedly, GBP/USD may possibly go up by 150 pips or more. On the other hand, if rate is cut to 4.75%, GBP/USD may possibly go down by 150 pips or more. But to be honest, this is just idiot's dreams :) They probably won't change the rate. There will probably be some comments out of BOE, accompanying the rate decision, and that may cause some volatility in the GBP/USD, but usually those comments are so obscure that it's very difficult to trade.
3. Thursday, January 11th, 2007 (7:45 am New York Time) E-12
Then we have Euro Zone interest rate statement. Same thing...most likely it will be no rate hike, and they'll keep the rate at 3.50%. If the rate is hiked to 3.75%, EUR/USD may possibly go up by 100 pips or more. If the rate is cut to 3.25% or less, EUR/USD may possibly go down by 100 pips or more, but again, that's just idiot's dream, the chances of changed rate are slim to none. There will be no comments accompanying this rate decision, so not much should happen if the rate stays the same, which it probably will.
4. Thursday, January 11th, 2007 (8:30 am New York Time) E-12
Then we have speech from Trichet coming out of the Euro Zone. Trichet is a very conservative and flaky speaker that's afraid of commitment...so his speeches are extremely difficult to trade. There are so many up in the air conflicting things that are said and they are very difficult to interpret, that most of the time the market just goes up and down, up and down from one little fart from Trichet to the next. Generally speaking if Trichet is talking about inflation being a threat, and a need for another interest rate hike, that should be bullish for EUR/USD. If he is talking about that inflation is moderating, and there is no need for another interest rate hike, that should be bearish for EUR/USD. But since it's a speech, and anything goes, I can't really tell you much more than that.
We have Industrial Production coming out of UK, which basically measures both industrial and manufacturing activity in the UK. This report has been coming out very predictably since June of this year, at 0% to 0.1%. However, last month, it shocked everyone after the reading came out at -0.8%. That was the lowest month over month reading since March. So consensus for tomorrow is kind of all over the place. The question stands...was last month's number a fluke, and now we'll have a big upside surprise? Or was last month's number valid and we'll have minimal recovery? Most economists are expecting a recovery to either 0.2% to 0.3%. If the number comes out at 0.6% or higher, it would mean that last month's number was more or less a fluke, and the Industrial Production in the UK is still going strong, and GBP/USD may possibly increase by 30 pips or more. If the number comes out flat, or 0% or lower, that would mean that even after such huge drop last month, this month there was no recovery, so it would signify a weakening industrial section in the UK, and GBP/USD may possibly decrease by 30 pips or more. Just watch out for any big conflicts on the Manufacturing Production.
2. Thursday, January 11th, 2007 (7:00 am New York Time) UK
We have interest rate decision coming out of UK. Expectations are that they'll keep the rate unchanged at 5%. There is pretty much 99.99% chance that they will keep the rates unchanged and it will be a no trade. However, if for some reason the rate is hiked to 5.25% unexpectedly, GBP/USD may possibly go up by 150 pips or more. On the other hand, if rate is cut to 4.75%, GBP/USD may possibly go down by 150 pips or more. But to be honest, this is just idiot's dreams :) They probably won't change the rate. There will probably be some comments out of BOE, accompanying the rate decision, and that may cause some volatility in the GBP/USD, but usually those comments are so obscure that it's very difficult to trade.
3. Thursday, January 11th, 2007 (7:45 am New York Time) E-12
Then we have Euro Zone interest rate statement. Same thing...most likely it will be no rate hike, and they'll keep the rate at 3.50%. If the rate is hiked to 3.75%, EUR/USD may possibly go up by 100 pips or more. If the rate is cut to 3.25% or less, EUR/USD may possibly go down by 100 pips or more, but again, that's just idiot's dream, the chances of changed rate are slim to none. There will be no comments accompanying this rate decision, so not much should happen if the rate stays the same, which it probably will.
4. Thursday, January 11th, 2007 (8:30 am New York Time) E-12
Then we have speech from Trichet coming out of the Euro Zone. Trichet is a very conservative and flaky speaker that's afraid of commitment...so his speeches are extremely difficult to trade. There are so many up in the air conflicting things that are said and they are very difficult to interpret, that most of the time the market just goes up and down, up and down from one little fart from Trichet to the next. Generally speaking if Trichet is talking about inflation being a threat, and a need for another interest rate hike, that should be bullish for EUR/USD. If he is talking about that inflation is moderating, and there is no need for another interest rate hike, that should be bearish for EUR/USD. But since it's a speech, and anything goes, I can't really tell you much more than that.
posted by Naveen Pantera at 10:25 AM
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