Currency Focus

USD - CPI suggest that inflationary pressures wont evaporate quickly and that the Fed will retain a tightening bias. The higher than expected inflation readings are likely to rekindle fears that the Fed is not done tightening yet. Perhaps most troubling is that the core year-over-year CPI remains well above the Fed's target zone at 2.7%, suggesting that inflation might not recede rapidly enough and prompt another Fed hike. The Fed will be vigilant in the face of rising inflation.

GBP - Overall, the minutes reinforce our view that the MPC will wait until April or May before acting again, unless there are some particularly worrying wage developments or evidence mounts that companies and retailers are increasingly trying to push through price hikes.
The minutes reinforced the impression from the Bank of England Inflation Report (released last week) that the MPC is quite worried that CPI inflation could fall quite sharply and quite rapidly later in the year. There seems to be no desire to send a hawkish message on interest rates unless there is a sharp uptick in wages and the market has taken comfort from that.
The 7-2 MPC vote to hold UK rates steady in February reveals that the Bank of England's tightening bias remains intact. There is a definite schism within the MPC right now. The doves are looking to lower inflation risks later this year but they are bound to be outweighed by the hawks' fears about the bad precedent being set by inflation at 2.7%. The market should stay on amber alert to the risk of another quick, pre-emptive hike next month. Even though the UK interest rate and debt markets have gleaned a little short term optimism out of the minutes, we think there is nothing to be buoyed up by. The lean towards higher rates remains in force.

JPY - The JPY strengthened a little when the decision was announced, but this only lasted a couple of minutes, with the market quickly focussing on the BoJ assurance that further tightening would be gradual. Indeed, it is almost certainly the case that no more rate hikes will be considered until Q3 and this will leave the JPY as a low-yielding currency without any support from rate hike speculation.

AUD - RBA Governor Stevens stated that they are more comfortable with the inflation outlook now than back in November, although risks still are screwed to the upside.

FX Trading Signals for Feb 21

1. Wednesday, February 21st, 2007 (4:30 am New York Time) UK
We have UK BOE minutes coming out from previous interest rate announcement, where UK government kept rates unchanged. The most important thing in this report will be the vote on the decision. Just to be safe, if you will be trading this report on your own, and the vote is at 6:3 or 5:4, you can possibly go long on GBP/USD, and expect a move of around 30 to 50 pips. That's the only suggestion I have for this one. You could try to go short on GBP/USD in case the vote is 9:0, but it maybe a slightly riskier trade that may recover back a lot quicker.

2. Wednesday, February 21st, 2007 (8:30 am New York Time) USA
Then we have CPI coming out of the US. I am planning to focus on CPI Ex Food and Energy (MoM), which is expected at around 0.2%. If the number reads at 0.4% or higher, it would signify extremely strong inflation, and you can possibly go short on GBP/USD. If the reading is at 0.0% or lower, it would signify no growth from previous month in inflation, and may possibly be bad for the dollar, so you can possibly go long on GBP/USD. These triggers are relatively safe triggers that may create a move beyond initial spike. If my triggers are hit, I would possibly expect a move of at least 50 to 70 pips or more.

3. Wednesday, February 21st, 2007 (2:00 pm New York Time) USA
Then we have FOMC meeting minutes coming out of the US. This will be a bit too difficult to explain on how to trade on your own, and price action from CPI will play a role also. So unless you know what you are doing, I suggest staying out of the market at this time.

BoJ rate hike

BoJ hikes its key interest rate by 0.25% to 0.50%. As the BoJ hiked its rate the JPY began to weaken against all majors by almost 100 pips against EUR, USD, GBP even it weakend against high yield currency like AUD and NZD. For this rate hike only one member out of eight had opposed and he is Iwata and other eight promoted to hike the rate. JPY was trading stronger against major when BoJ Governor Fukui proposed for rate hike and then when the rate hike came in since then JPY trading weaker. On the back of JPY weakend this suggest that rate hike didnt surprised the market players.

USD/CHF - Will it fall back to 1.1900 level.

Will USD/CHF fall by 500 pips to 1.1900. Well here i placed my weekly chart. On technical front its quite possible that we can see the 1.1900 level. but what about the Swiss economy and the data coming in and the key thing is interest rate from Swiss. Well on the other side the US. Even one great piece of eco data from USA will blow the hell of my chart like data from NFP, Trade balance or Hosing Market or even a bit of inflation pressure and Feds hawkish comments. Fall by 500 pips for Swiss by the help of Technical it'll be a really stretchy one. Look out the Weekly RSI which is also keep resisting the 2 year bear trendline a swhat u see the pair is resisting. A break above 1.2570 will negate the 400 odd pips correction. Anything break above 1.2570 it'll take you to 1.3230. Now 1.2190 is the key suppor for this pair. Once breakdown the level of 1.2190 then it'll take to 1.1900 level.

Currency Focus

USD - Bernanke's testimony to Congress yesterday was more dovish than expected. Bernanke said that while the conditions for growth are still favourable, there are signs that inflation pressures continue to ease and added that though there have been signs of stabilization in the housing market there are still risks that the correction in the housing market could be greater than expected and thereby affect consumer spending. Fed Chairman Ben Bernanke told Congress that inflationary pressures had 'abated somewhat' whilst growth was returning to a more sustainable pace.

GBP - The sharp falling-back in retail sales in January and a fall in the deflator ease pressure on the Bank of England to raise interest rates again in the very near term and dilute the chances of a hike in March. In UK the news wasn't nearly as sunny as in Japan as Retail Sales recorded the worst drop in 4 years falling -1.8% vs. 0.2% expected. The biggest decline was in clothing and electronics sectors and that news along with the fact the RICS housing survey also printed below consensus, clearly curtails any bullish expectation that BOE will tighten any time soon.

Set of US Bad Numbers

Today is very bad day indeed for USD in terms of Economic Data, except Emire State Buisness Index all came below the expectations.

Empire State Buisness Index came at 24.4 vs 10.5 expected +

Imort Price Index came at -1.2% vs -0.2% expected -

TIC Report came at 15.6B vs 60.0B expected -

Industrial Production came at -0.5% vs 0.0% expected -

Capacity Utilization came at 81.2% vs 81.8% expected -

GBP/USD - 5 MIN CHART

EUR/USD - 5 MIN CHART

UK RETAIL SALES

UK Retail Sales came below the expectation at -1.8% vs 0.2% expected reading.

FX Trading Signals for Feb 15

1. Thursday, February 15th, 2007 (4:30 am New York Time) UK
We have UK retail sales coming out. After a big jump in Retail Sales for December, it's expected that the retail sales in January will only show moderate growth...just enough to meet inflation. So it's expected that the number will come out at 0.2%, though there are more economists that are expecting a lower number, rather than higher. If you want a very nice and steady sustainable move, then you can possibly go long on GBP/USD if the number comes out at 0.6% or higher, or go short on GBP/USD if the number comes out at -0.2% or lower. Unless you have Secret News Weapon or the forexdiamonds.com membership, you probably won't be able to catch the initial spike, but that's not the end of the world. Just wait for about 50% of retracement after the spike, and enter then, and watch carefully whether the initial spike level is broken or tested. If tested several times, take profits there, if broken, you can try to hold to your position for about 30 minutes and see what it brings you.

2. Thursday, February 15th, 2007 (8:30 am New York Time) CANADA
We have Canadian manufacturing shipments coming up, which is expected to come out at 0.7%. If the number comes out at 2.3% or higher, it would match the previous high number, and would prove very strong growth two months in a row, so you can possibly go short on EUR/CAD. If the number comes out at -1.5% or more negative, it would mean that in December manufacturing shipments have lost significant ground which it gained in November, and you can possibly go long on EUR/CAD. Anything in between would be a no trade. If the triggers are hit, I am expecting a move in EUR/CAD of at least 40 to 60 pips.

3. Thursday, February 15th, 2007 (8:30 am New York Time) USA
We have US Empire Manufacturing coming out, which is expected to come out at around 10.5. If the reading is 25 or above, it would be the highest reading since June of 2007, and you can possibly go short on GBP/USD. If the reading is -5 or below, it would the first negative reading in a while, and you can possibly go long on GBP/USD. You can try trading this report simultaneously with the Canadian one, and if both report compliment each other, you can even trade USD/CAD to get a more powerful trade. If the triggers are hit on Empire manufacturing, you can expect a move of 30 to 50 pips, but you may have to give it 5 to 10 minutes to fully unfold.

4. Thursday, February 15th, 2007 (9:00 am New York Time) USA
Then we have TIC report coming of the US. Expectations are at +60 billion. Remember...this report lost most of its respect in the last year. It used to move with deviations of as little as 10, but now you gotta go much bigger, and still it's risky. So if you want to be relatively safe, you can possibly go short on GBP/USD if the number comes out at 120B or more, and expect a spike of 30 pips or more. Or if the number comes out at 10 billion or less, you can possibly go long on GBP/USD and expect a spike of 30 pips or more.

5. Thursday, February 15th, 2007 (9:15 am New York Time) USA
Then we have Industrial Production coming out of the US. It's expected to come out flat at 0.0%. If the reading is at 0.4% or higher, it would match the highest reading since June of 2006, and you can possibly go short on GBP/USD, and expect a move of over 30 pips. Or if the reading is at -0.4% or more negative, it would be the lowest reading since September of 2005, and you can possibly go long on GBP/USD, and also expect a move of 30 pips or more.

6. Thursday, February 15th, 2007 (10:00 am New York Time) USA
Ben Bernanke will be speaking again and taking questions. I would suggest staying out of the markets, because you may see nasty whipsaw action by 30 or 40 pips up and down on GBP/USD. I doubt that he will say much more than he said today already. So just heads up on market volatility, I won't be trading it personally.

7. Thursday, February 15th, 2007 (12:00 pm New York Time) USA
Then we have Philadelphia Fed Index coming out, which is expected somewhere between 4 and 5. This report gave only one signal in September, in the last 2 years. It did create a 50 pips move in GBP/USD, but mostly it was just the timing of the report. EUR/USD couldn't break a high for a while, and this report was a catalyst which helped it do it, so it triggered massive stop/losses, and exaggerated the move across the board against the dollar. So bottom line is this is a very low possibility trade. As I said, the report is expected to come out at around 4 to 5. If it reads 20 or higher, it would be the highest reading since April of 2005, and you can possibly go short on GBP/USD. If the reading is -10 or more negative, it would be the lowest reading since December of 2001, so you can possibly go long on GBP/USD. If my triggers are hit, we may see a move of 30 to 50 pips on GBP/USD. I personally won't be trading this report, because I will need to catch up on some sleep from trading the 6 reports prior to that. Plus, even in in the unlikely event that my triggers are hit, the move won't be anything that's worth crying over in case I miss it.

Japans Stronger GDP at 1.2%

Japans GDP numbers came better than expected at 1.2% vs 0.9% expected reading. As the numbers came and still JPY trading against all majors especially against USD and GBP. As the market anticipate that BoJ will hike the 0.25bps interest rate on the back of stronger GDP numbers.

GBP/JPY - Yen trading stronger against GBP by nearly 180 pips.

USD/JPY - Yen trading stronger by nearly 93 pips on the back of stronger GDP data.

Bernanke's Testifies in Senate on Monetary Policy

Bernanke told Congress Wednesday that the economy should grow modestly this year despite a weaker housing market. He stuck to the Fed's forecast that inflation will continue to ebb.

GBP/USD - HERES THE UPWARD MOVEMENT OF 75 PIPS

EUR/USD - UPWARD MOVEMENT OF 50 ODD PIPS

FX Trading Signals for Feb 14

1. Wednesday, February 14th, 2007 (8:30 am New York Time) USA
We have Retail Sales coming out of the U.S. for the month of January. We have two numbers...the headline number and the core number. My focus will be core number, also known as less autos number. It's expected that the number will come out at 0.4%. If it comes out at 0.8% or higher, it should be good for the dollar, so you can possibly go short on GBP/USD. If it comes out at 0.0% or lower, it would be bad for the dollar, so you can possibly go long on GBP/USD. Unless you are using Secret News Weapon or my Forex Diamonds paid membership, you probably won't be able to get in before the spike, because you'll get the news late. If that's the case, don't worry, if my trigger is hit, and there are no conflicts on headline number or revisions, and the price still hasn't moved by over 20 pips, you can just get in few second late, and hold to your position for around 5 minutes or less. If my triggers are hit, I would expect a move of at least 50 pips.

2. Wednesday, February 14th, 2007 (10:00 am New York Time) USA
Then we have Ben Bernanke speaking. Unfortunately since it's a speech, I can't give you specific instructions how to trade it. If you are not sure how to trade speeches, and you are not part of my forexdiamonds.com service, I suggest staying out of the markets from about 10:00 am to 10:30 am.

3. Wednesday, February 14th, 2007 (4:45 pm New York Time) New Zealand
Then we have Retail Sales coming out of New Zealand. We have three different numbers. We have the retail sales for the month of December, we have the Retail Sales less autos for the month of December, and we have quarterly retail sales, less inflation for the 4th quarter. In New Zealand, they don't care much about less autos like in the US. My focus will be on monthly headline number, which is expected to come out at around 0.7%. If the reading is 1.1%, it would be good for New Zealand dollar, and you can possibly go long on NZD/USD. If the reading is 0.2% or lower, it would be bad for New Zealand dollar, and you can possibly go short on NZD/USD. Just make sure the quarterly retail sales that are expected at 1.3% are not conflicting, and there are no conflicting revisions from previous month. If that's the case, and my triggers are hit, NZD/USD may move by 30 to 50 pips or more within about 30 minutes to 1 hour after the report.

4. Wednesday, February 14th, 2007 (6:50 pm New York Time) JAPAN
Then we have GDP report coming out of Japan. I would normally give you triggers for this report, but this month there are some special circumstances. The expectations are very mixed up, and with the annualized and quarterly numbers coming out at the same time, I would suggest staying out of this report, unless you really know what you are doing.

AUD/NZD - Waiting for Retail Sales Data

NZD/USD struck in the tight range band between 1.1314 and 1.1251. AUD weakened against NZD on the back of softer inflation data, unchanged interest rate and as well dovish RBA's quarterly monetary policy statement, for any trigger either side, it'll get only after the Retail Sales Numbers which is coming out from New Zealand on Wednesday at 2145GMT. This data will be the key foo this pair.

US TRADE BALANCE CAME WEAKER

US Trade Balance came below the market expectation at -61.2B vs -59.5B expected. And we saw a 30 pips of movement in the EUR/USD and GBP/USD as the news came in and after that all comes under normal.

EUR/USD - 1 MIN CHART

GBP/USD - 1 MIN CHART

UK CORE UPI SOFTER

UK's Core CPI data came softer at 1.6% against the 1.8% expected. GBP tanked nearly 100 pips against the USD and JPY. Even RPI too disappointed.

GBP/USD - 1 MIN CHART

GBP/JPY - 1 MIN CHART

GBP/JPY - 5 MIN CHART

GERMAN GDP numbers came better than expected.

German GDP came better than expected at 0.9% qoq against 0.6% expected number. In few min time this pair generated a hardly 30 to 40 pips of rise.
Well in the case of EUR/GBP here i didnt find any great movement, i saw a upward of 20 pips so i didnt take the charts.

EUR/USD - 5 MIN CHART > THIS PAIR GENERATED 30 PIPS UPWARD MOVEMENT

EUR/JPY - 5 MIN CHART > THIS PAIR GENERATED 40 PIPS OF UPWARD MOVEMENT.

Forex Trading Signal for Feb 13

1. Tuesday, February 13th, 2007 (4:30 am New York Time) UK
We have UK CPI coming out. This reading is extremely important, considering all the interest rate activity out of UK lately. We will have three numbers, the core CPI, which is usually very steady, and we have the headline annual CPI. That's the number that everyone seems to care a lot about. It's expected that annual CPI will come out at either 2.9 to 3.0%. If this reading comes out at 3.2% or higher, you can possibly go long on GBP/USD. If the reading comes out at 2.7% or lower, you can possibly go short on GBP/USD. I am expecting a move of at least 50 pips on this report if my triggers are hit. If you miss the initial spike, you can try to jump back in on 2nd wave at around 40 to 50% retracement.

2. Tuesday, February 13th, 2007 (8:30 am New York Time) USA
Then we have US trade balance coming out. I can't say that this is that hot of a report, but it's worth watching and possibly trading. It's generally expected that the trade balance will come out at around -59.7 billion or so. If this indicator reads -64 billion or more negative, it would be bad for the dollar, and you can possibly go long on GBP/USD. If this indicator comes out at -56 billion or less negative, it would be good for the dollar, and you can possibly go short on GBP/USD. If you miss the initial spike, you can try to jump back in on 2nd wave at around 100% retracement.

RBA Quarterly Inflation Statement

RBA lowered it forecast for Underlying CPI for this year, which is the softer tone or even slightly more dovish for the Aussie dollar.

AUD/USD - 15 MIN CHART

AUD/NZD - 15 MIN CHART

Currency Update

USD trading stronger against EUR, CHF and GBP (almost trading stronger by 100 pips atleast)and trading tighter against JPY. Trading pretty flat against CAD but with the negative bias even against too with NZD, but trading a little bit stronger against AUD after the RBA lowered its forecast for underlying inflation this year which negatively effected the AUD.

Currency Focus

GBP - I expect a more hawkish tone to the February Inflation Report which will be used to set out the BoE's case for a final 25 basis point interest rate hike in either March or April in our view.
"(About UK PPI) This will maintain the Bank of England's concern that manufacturers will try to take advantage of lower input costs to improve their margins rather than holding their prices steady or even cutting them.
JPY - I expect the Bank of Japan to hike once only in Q2, with the Fed on hold and the ECB hiking twice. It's basically a carry trade story. The key issue for the JPY will be whether or not there can be some recovery in interest rate expectations and this in turn will depend upon the data. Q4 GDP will be the main focal point this week in this regard and a strong number could lead to some profit taking on the JPY. The next BoJ meeting is on February 21.
The G7 did not mention carry trades directly and the statement did not signal any action that is likely to be taken by the policy makers. The yen was likely to weaken further in the near term.
AUD - The RBA lowered its forecast for underlying CPI this year, adding that at their recent meeting they saw no reason to raise rates as the immediate outlook for CPI was fairly subdued. However, they did say that all incoming data would be monitored as some risks remained in place, notably from a tight labour market. The softer tone to the statement does point to Aussie dollar underperformance in the near term. RBA still keeping a watchful eye on the tight labor market, it seems the RBA is telling the markets that rates will be on hold for 2007.
CAD - The jobs data are definitely responsible for the shift in the Canadian dollar. The Canadian dollar has been trading in such a tight range over the past little while...it needed something like this to push it out of its range.

CAD : EMPLOYMENT CHANGE BETTER THAN EXPECTED

Canadas labour market data comes in mixed bag, Employment Change number came better than expected at 89k vs 25k expected and Unemployment Rate came below the expectation at 6.2% vs 6.1% expected. The CAD strengthened after the far better than expected number of Employment Change, from 1.1845 to 1.1745

FX Trading Signals for Feb 09

1. Friday, February 9th, 2007 (4:30 am New York Time) UK
We have UK trade balance coming out. We have three different numbers, but the most important one by far is the visible trade balance that's expected to come out at -6,900 million. If this number comes out at -6,100 or less negative, you may possibly wait for the initial spike to happen, and go long on GBP/USD, and expect about 40 to 50 pips total move from pre-release price. If the number comes out at -7,700 or more negative, you may do a similar trade, but short GBP/USD instead.

2. Friday, February 9th, 2007 (7:00 am New York Time) CANADA
Then we have Canadian employment numbers coming out. It's expected that Canadian employment grew by 14K in the month of January. If the reading reads 40K or more, you can possibly wait for initial spike, then see retracement, and go short on USD/CAD. If the reading reads -15K or more negative, you can possibly wait for initial spike, see retracement, and go long on USD/CAD. I would expect a move of around 50 pips either direction, assuming that my triggers are hit... Remember, there is also unemployment rate that's coming out, and is expected at 6.1%. If there is a conflict by 0.2% or more on unemployment rate, I would suggest staying out of this trade.

Currency Focus

EUR - There's not much surprise here. He's (Trichet) saying monetary policy is still extremely accommodative. This puts the stamp on a rate hike in March and also keeps speculation intact of a move to 4 percent by June. So far, the ECB press conference is yielding few surprises, with Trichet confirming a March rate hike and pointing to further rate increases later in the year, but with indeterminate timing. The risks at this point seem to be to the EUR downside since perceptions of a delay in further tightening will reduce the incentive to hold Euros relative to Dollars.

JPY - The yen has continued to weaken and the market is increasingly complacent regarding the G7 meeting. Haru's comments have also worked against the yen at the margins. The next obvious risk to the yen following the G7 meeting will be the BOJ policy board meeting on Feb. 20. At present, markets see only a 35% probability of a tightening at that meeting and to the extent that those expectations persist or decline even further, the yen should remain weak.

AUD - Markets get confused when too much information is thrown at it at one time, and the combination of the softer employment but stronger unemployment initially caused some confusion. The focus is now on the statement of monetary policy, (due on Monday). The data does suggest that there is some further upside risk on Aussie. We have seen a lot of Aussie sold on softer CPI and some of the risk is that Aussie needs to be bought back ahead of the statement of monetary policy.

Trichet "Strong Vigilance"

ECB kepts its interest rate unchanged at 3.5% and then we've a hawish tone from ECB President Trichet as he used the word "STRONG VIGILANCE" in his intro statement and this clearly signalling that ECB will hike the rate in its next meeting on March 08 to 3.75%. Even in his last month indicated that he'll comfortable with market expectation for a march rate hike. Still he is repeating that ECB Monetray Policy continues to be accomodative and that interest rate are still at LOW LEVEL And he said that recent indicator and some survey data are suggesting that economy expansion in E12 is strong and he said "to be remain strong". Also he statet that Germans VAT hike is still not fully reflected in CPI. Trichet said that inflation may slow in spring summer but is expected to accelerate again second part of 2007.

After the Trichet speaks and his word STRONG VIGILANCE did not bought a huge reaction in market as the EUR/USD firmly trading above 1.3010. Since the Trichet's hawkish tone EUR/USD gained a nearly 60 pips.

Yen Weakens, Carry Trade continues against AUD & NZD

Yen trading very weaker against majors like USD, EUR, AUD and NZD and trading stronger against GBP coz BoE kepts its interest rate unchanged at 5.25%. And trading volatile against CAD and as well CHF. Yen is keep week as the G7 meeting is nearing.

BoE Interest Rate Unchanged at 5.25%

BoE kepts its interest rate unchanged at 5.25% which is the five-andhalf year high.

GBP/USD - 5 MIN CHART

EUR/GBP - 5 MIN CHART

Now we'll see the outcome of ECB interest rate meeting and as well ECB President Trichet Speaks.

AUD/NZD - LABOUR MARKET DATA

New Zealands Uemployment data came better than expectation at 3.7% vs 3.8% expected reading. And Australia's Emplyoment Change number came at -4k which is below the estimates vs 3k estimated number and Unemployment Rate came better than expectation at 4.5% vs 4.6% expected.

AUD/USD - 15 MIN CHART

NZD/USD - 15 MIN CHART

AUD/NZD - 15 MIN CHART

FX Trading Signals for Feb 08

1. Thursday, February 8th, 2007 (7:00 am New York Time) UK
We have UK interest rate statement coming out. The expectations is that the UK government will keep the rate unchanged at 5.25%. However, after a surprise rate hike last month, about 15% of the economists are expecting another surprise rate hike this month. I personally don't think that there is going to be a rate hike...simply because the previous rate hike was too close on the votes. But I hope I am wrong :) Basically if there is a rate hike to 5.50%, I may possibly go long on GBP/USD. Expect about 100 to 120 pips move, then we should probably see about 40 to 50 pips retracement, which will be caused by people taking their profits, and then we'll probably see another 100 pips move or so. If there is a rate hike, and you can't get in on the initial spike, just wait for the retracement, and once you start seeing consolidation period after retracement, you can possibly go long. If there is no rate hike, most likely we'll see a temporary weakening in the pound, however shorting on no rate hike would be too risky in my opinion.

2. Thursday, February 8th, 2007 (7:45 am New York Time) E-12
Then we have interest rate statement out of E-12. It's expected unanimously that the rate will be kept unchanged at 3.50%. If for some reason there is a rate hike by 0.25% or more, I may possibly go long on EUR/USD. If there is no rate hike, I wouldn't trade. If there is a surprise rate hike, expect similar price action as I've explained on the pound above. Just EUR/USD will probably have smaller range...initial move may only be 80 pips or so.

3. Thursday, February 8th, 2007 (8:30 am New York Time) E-12
Then we have Trichet speaking. Generally his speeches are very mixed and very dangerous...they tend to create whipsaw moves in EUR/USD, so I am not planning to trade this speech. However, you should definitely be aware of this speech, so that you don't have a surprise stop/loss triggered if you are leaving your trades on.

UK : Industrial Production

UK's INDUSTRIAL PRODUCTION CAME BELOW THE EXPECTATION AT -0.1% AND MANUFACTURING PRODUCTION CAME BETTER THAN EXPECTED AT 0.2%. HERE WE HAVE THE 28 PIPS FALL IN GBP/USD AFTER THE NEWS CAME IN.

FX Trading Signals for Feb 07

1. Wednesday, February 7th, 2007 (4:30 am New York Time) UK
We have Industrial Production coming out of the UK. After a big jump on this reading last month, they are expecting this reading to be quite low, at 0.1%. If the reading comes out at 0.6% or higher, you can possibly go long on GBP/USD. If the reading comes out at -0.4% or more negative, you can possibly go short on GBP/USD. Such deviation would probably cause a move of 50 pips or more, and the price can continue moving for as long as 1 hour. So if such deviation occurs, and you are using a free news service on your broker, that will give you the news several seconds late, you can just skip the initial spike, wait for a retracement of 30 to 50%, re-enter into the trade, and shoot for about 50 pips target above or below the pre-release price.

2. Wednesday, February 7th, 2007 (8:30 am New York Time) USA
We have US nonfarm productivity and unit labor cost coming out. Expect some small volatility during this time, but these reports are not that important, so I won't be trading them. In November, we saw a huge negative surprise in nonfarm productivity, and the pound just spiked by about 14 pips or so. These are just not the kind of moves I am looking for.

3. Wednesday, February 7th, 2007 (4:45 pm New York Time) NEW ZEALAND
Then we have New Zealand unemployment rate coming out. It's expected to come out at 3.8%. If it comes out at 3.5% or lower, it would be historical low, so you can possibly go long on NZD/USD. If the unemployment comes out at 4.1% or higher, it would be the highest reading since June of 2004, and you can possibly go short on NZD/USD. I would expect a move of at least 50 pips on NZD/USD if such reading occurs. And same as I said before, even if you have a free news service that's available on most brokers, and you get the news few seconds late, you can still enter in this trade, and hold on to a position for as long as 30 minutes to an hour.

4. Wednesday, February 7th, 2007 (7:30 pm New York Time) AUSTRALIA
Then we have Australian employment figures coming out for the month of January. It's expected that it will come out at around 3K or so. If the number comes out at 50K or higher, it would be a very healthy employment reading, and you can possibly go long on AUD/USD or AUD/NZD. A reading of -35K or less would be the lowest reading since September of 2005, and you can possibly go short on AUD/USD or AUD/NZD. If my triggers are hit, I would expect a move of around 50 pips on AUD/USD, and the pair will probably move for as long as 30 minutes to an hour. So even if you miss the initial spike, because your news service is too slow, you can try to get in a bit late, and still come out in profit. There is also unemployment figure that's coming out simultaneously. That's expected at 4.6%. Same as it's been coming out for the last 3 months. If that number conflicts by 0.1%, take advantage of a better price because of conflict. If the number conflicts by 0.2% or more, I would stay out of the trade altogether.

Currency Update

For some time EUR/USD is struck in tight range band between 1.2970 and 1.2910. Still i see it'l move within the above mentioned band. And we have a speak from Fed Chair Bernanke and still some couple of hours to go. Untill then it'll be within the mentioned band. Lets see what he says anything which is good or bad for USD.
Yen is slowly riding against USD on the back of G7 meeting on Friday where the Yens Carry trade fate might be settled out who knows. JPY tested the resistence at 120 level. If G7 Ministers strongly points out the JPY weakness against USD/EUR and GBP then we'll see some windup in the carry trade.
GBP is strongly trading against USD after the strong numbers from BRC Retail Sales from UK which came at 3% against the expected reading at 2%. Currently GBP/USD is trading between 1.9707 and 1.9670. GBP/USD have a very strong resistence at 1.9700 level.
Currently USD/CHF is trading between 1.2459 and 1.2427 until it get breakaway from either side it'll struck in narrow trading band.
USD is firmly trading strong against CAD and if we get any good words from Bernanke then we might see the 1.1900 level very soon indeed. The strong support for this pair is at 1.1800 level.
NZD/USD is holding 0.6785 just 15 pips down from 0.6800.

Currency Focus

JPY - The markets continue to be focused on this weekend's G7 meetings and the potential for official or sideline discussions over yen weakness. We believe that there most likely will be a discussion, most likely officially and on the sidelines, but we do not think that there will be any significant market-moving events over the weekend. Still, we note the high level of risk over the next few days.

US : ISM Non Manufacturing Index

US ISM Non Manufacturing Index came better than expected at 59 v/s expected at 56.8. After the news released we saw a small gain in USD and later the GBP gained by 27 pips. Here i captured the movement after the news came in. Slowly inching towards 1.9600 levels. See the chart below...

What Officials Says ?

Toshihiko Fukui, Bank of Japan GovernorFri, Feb 2 2007, 10:45 GMTAFX News - "It is important to judge if the economy is in a position to maintain sustainable economic growth with stability of prices, and the Japanese economy is now heading in that direction. The chances that we will return to a deflationary spiral are slim."

Jean-Pierre Roth, Swiss National Bank presidentThu, Feb 1 2007, 16:13 GMTAFX News - "We would definitely adjust our monetary policy should we think the property market poses a risk to the overall price stability of the economy."

Henry Paulson, U.S. Treasury SecretaryWed, Jan 31 2007, 16:21 GMTAFX News - "A major objective of my two remaining years as Treasury Secretary will be pressing the Chinese government to advance towards the goal of a renminbi whose value is freely set in a competitive marketplace, based upon economic fundamentals."

Currency Focus

EUR - Will Jean Claude Trichet follow his American colleague and leave European interest rates unchanged? Well, according to last week's data most likely he will. So the ECB rate decision will be in the forefront this week but before that let's go over last week's numbers. On the positive side, we can only mention German Retail Sales which came much higher than expectation and the German unemployment rate which also improved.
The ECB gave pretty clear guidance in January that there would be no change in February, but (that there) would be in March.

GBP - Also keep an eye on GBP. It has come through a corrective period this week (without breaking EUR/GBP 0.6650), but with the MPC meeting due next week, this could see a resumption of recent strength in the very short-term. A rate hike next week seems unlikely, but given what happened in January, the market maybe nervous about the outcome and this could see EURGBP settling back below 0.6600. Near-term resistance is now set at 0.6625.
The five MPC members who voted for a hike in January believe in pre-emptive action to limit the peak at which rates will have to be raised, so they will likely go for a hike this time around as well. I believe that a rate rise in February, while the economy is able to absorb it, is the likely option. They have a choice of tackling inflationary pressures head on with a further rate rise in February, or gambling by taking a 'wait and see' approach in the hope that inflationary pressures will decline in the first quarter of 2007. Overall there is something for both hawks (higher inflation readings) and doves (need to wait to see effects of earlier hikes).

AUD - The focus will be on the RBA. People will be looking for an indication of how hawkish they'll be.

FX Trading Signals for Feb 05

1. Monday, February 5th, 2007 (4:30 am New York Time) /9:30 GMT) UK
We have UK Services PMI coming out. This indicator measures services industryin the UK. Services is about 70 to 80% of UK GDP, however generally speakingthis report is not as important as manufacturing PMI. It's expected that thisnumber will come out at 60. If it comes out reading 57, it would be bad for thepound short term, and I may possibly go short on GBP/USD. If it comes out at 62or higher, it would be a very healthy reading above 60, and I may possibly golong on GBP/USD. It make take 20-25 minutes for the move to fully manifest. Iam expecting around 30 pips on this, if my triggers are hit.

2. Monday, February 5th, 2007 (10:00 am New York Time)/(1500HRS GMT) USA
Then we have ISM Non-Manufacturing report coming out of the U.S. This report isalso tracking the services industry in the US, and services is also a majorcontributor to the GDP. It's not nearly as important as its sister report ISMManufacturing, but it's also worth watching. It's expected thatNon-Manufacturing will come out at approximately 57. A reading of 55 or lowerwould probably be bad for US dollar short term, and I may possibly go long onGBP/USD. A reading of 59 or higher would be a very healthy reading andtherefore good for the dollar, so I may possibly go short on GBP/USD. If mytriggers are hit, I would also expect a move of around 30 pips on this one.

USD - I think, all in all, the U.S. numbers are not so good, but they're not heading into the tank, either. The growth prospects look fair to middling for the U.S and that may have some positive spill over into Canada, as well.

GBP - The five MPC members who voted for a hike in January believe in pre-emptive action to limit the peak at which rates will have to be raised, so they will likely go for a hike this time around as well.

JPY - The yen gained against the dollar and the euro for the third straight day on speculation the G-7 will discuss the yen’s weakness at next week’s G-7 meeting in Germany. US Treasury Secretary Henry Paulson and European officials have commented on the yen’s depreciation.

AUD - We have seen a bit of pressure on market participants unwinding carry trades, so that has really kept both the Aussie and the Kiwi with a heavy bias.

NFP Data and PIP Chart

US's Non Farm Payroll data came at 111K below the expectations at v/s expected at 152k.

Here is the PIPS movement against majors after the numbers/ And unemployemt data came at 4.6% which is also below expectation.

EUR/USD = 49 PIPS

GBP/USD = 63 pips

Currency Focus

Now hardly 40 minutes to go for the NFP data release from USA, but in the pairs like EUR/USD and GBP/USD there was utterly no movement at all, a hard idle volatile of just 20 pips or so. USD trading higher against JPY and CHF and trading weaker against AUD. NZD/USD is keep resisting at 0.6800. USD/CAD is firmly trading above 1.1800 level.

FX Trading Signals for Feb 02

1. Friday, February 2nd, 2007 (8:30 am New York Time) USA
We have US Non-Farm payroll coming out. As you may already know, this is probably the biggest economic report in the world that everybody watches, and can move the market by over 100 pips easily. It's expected that Non-Farm will read at 150K. If the reading is at 180K or more, I may possibly go short on GBP/USD, since it would be good for the dollar. If the reading is at 85K or lower, I may possibly go long on GBP/USD, since it would be bad for the dollar. The reason my long trigger is so much more conservative is because this report may also include annual government benchmarking, which is expected to bring 800,000+ extra jobs in 2006, and create a huge revision, which should be relatively well distributed among 12 months or so. If that happens, such positive revision may mute a negative dollar move, so I feel a bigger trigger is warranted.

AUD - TRADE BALANCE

Aussie Trade balance came in below expectation at -1.34B against the -950M. See the chart and what the nes has done to AUD/USD. And there was no moment in AUD/NZD after the Trade Balance news. And then we saw a 49 pips weak against EUR. AUD still trading weak against USD, EUR and NZD.

EUR/AUD - 30 MIN CHART, THE ACTION AFTER TRADE BALANCE FROM AUD.

AUD/USD - 30 MIN CHART, THE ACTION AFTER TRADE BALANCE FROM AUD.

US Data Backup

After the below expectation data of US ISM Manufacturing PMI came in below the boom/bust level of 50. On that action we saw a little bit ok move jerk in EUR/USD about 29 pips and 35 pips movement in GBP/USD. Just follow the chart and see what happened. All the movement came in just 2 min. (just see the spike of 35 pips which is round marked marked).

US ISM Manufacturing PMI data came below the expcatations at 49.3 which is below the boom/bust level against the expected at 51.6. In earlier we had a Core PCE Price Index which is also came in below the expectation at 0.1% against the expected figure of 0.2%.

Dollar Cross Update

EUR/USD - After making a rally of nearly 100 pips from 1.2935 to 1.3040, eversince making a high of 1.3040 the pait struck in the tight trading range just above 1.3000 levels. Now USD is keenly waiting for Core PCE Price Index and as well ISM Manufacturing PMI data to give the trends. As of now 1.3000 levels will watched very closely.
USD/JPY - Slowly and gradually Yen is getting strength to strength against USD. On monday Yen made a low of 122.20, and since then Dollar weakend by nearly 180 pips or so and currently just trading above 120 levels.
GBP/USD - GBP is getting stronger against Dollar after making a strong support at 1.9620. Now its trading 70 pips higher to the low of 1.9620. The strength is boosted from the Manufacturing PMI data which came in better than expectations.
USD/CHF - Yesterday we've a better than expectations numbers from Swiss in the form of KOF Leading Indicators which boosted the CHF to break the critical resistence of 1.2500. And today even despite of slightly below expectation numbers from Swiss like Trade balance and SVME PMI. Now inching towards 1.2400. The real boost is coming from Yen (in next week G7 meeting the members will discuss about the Yen and the very strong comment from US Tresaury Sec Paulson said "he was watching the value of Yen very very carefull", which is the good news to wind up the carry trade position like JPY and CHF). Next support for the USD/CHF is at 1.2380.
USD/CAD - Struck in a tight range of 35 pips band and struggling to move above 1.1800. And the near term support is at 1.1750.

Currency Focus

USD - It wasn't a major surprise in the Federal Reserve position. Everyone expected that the rate would not be changed. What was slightly surprising was the combination of the Federal Reserve saying that economic growth was picking up in the United States but inflation pressures were diminishing.
GBP - In the UK, BoE policymaker Timothy Besley was interviewed in the FT, noting concern that inflation will not fall as quickly as the central bank would like. He said that his decision to join the majority of the MPC in voting for January's 25bp rate hike was based on a "drip-feed" of data since the end of November. He regretted the surprise to the markets and noted that the hike was pre-emptive to avert more aggressive tightening later on. GBP to remains under pressure short term.
JPY - The JPY inched higher overnight on worries that the G7 will say something about the currency’s broad weakness, though with the relatively soft data constraining the BoJ it is difficult to see what the authorities can really do. The headlines are focussing on US Trsy Sec. Paulson’s comments that he is watching the Yen 'very, very carefully'. However, while traders could take this as the end of the 'carry trade', keep in mind that he also suggested that the soft yen is a reflection of the underlying fundamentals and that he does not think that Japan is manipulating their currency.

What Fed Said after FOMC

US Fed held it interest rate at 5.25%. Now US economy looks stronger and inflation gradually getting softer. Fed statement says "inflation risks remain and that additional tightening may be needed". Also Fed noted "Some tentative signs of stabilization have appeared in the housing market."

FX Trading Signals for Feb 01

1. Thursday, February 1st, 2007 (4:30 am New York Time) UK
We first have UK manufacturing PMI coming out. This report measures manufacturing activity in the UK, and is considered important. This indicator has been on steady decline since September of 2006, and is expected to come out slightly lower this month than it was last month. Last month this indicator read 51.9, and this month it's expected to come out at 51.7. If this report comes out at 53 or higher, it would be a very nice rebound, and would break the declining streak, so I may possibly go long on GBP/USD. Plus considering the strength of the pound in the last couple of months, such high reading of 53 or higher, would be extremely promising, because usually when the currency is strong, manufacturing activity within the country suffers massively. If the reading is at 50.0 or lower, that would be bad for the pound short term, and I may possibly go short on GBP/USD. If my trigger is hit, we might see a move in the GBP/USD pair by as much as 50 pips, but the move may take 20 to 30 minutes to fully unfold. If you don't have the capability of getting before the spike starts happening, then you can try to get in on 2nd wave, per my video tutorial in the beginning of this email.

2. Thursday, February 1st, 2007 (8:30 am New York Time) USA
We have Core PCE coming out of the US, which is an inflationary indicator that sometimes the government trusts even more than CPI. It's expected that PCE will come out at 0.2% month over month. If the reading reads 0.0% or negative, it would be bad for the dollar short term, and I may possibly go long on GBP/USD. If the reading reads 0.4% or higher, it would mean inflation is getting out of control, and the Fed may do another rate hike eventually, so it would be good for the dollar, and I may possibly go short on GBP/USD. This report rarely give a trade signal, so I am uncertain on how exactly the price action will react if my triggers are hit, but I would expect a move of at least 30 pips on GBP/USD, and perhaps even 50 pips or more.

3. Thursday, February 1st, 2007 (10:00 am New York Time) USA
Then we have US ISM Manufacturing coming out. This is a big boy. After Chicago PMI coming out at 48.8 earlier today, I am sure there are expectations that ISM manufacturing would be more likely to give a downside surprise, so an upside surprise would be a bigger surprise. It's expected that ISM Manufacturing will come out somewhere between 51.5 to 52.0. If the ISM manufacturing reads 50 or below, I may possibly go long on GBP/USD. If it reads 53 or above, I may possibly go short on GBP/USD. If my triggers are hit, I would expect a move of around 50 pips or more. It may take about 5 to 10 minutes for the move to fully develop, so you can look for second wave trades per my tutorial video.

4. Thursday, February 1st, 2007 (7:30 pm New York Time) Australia
Then we have Australian trade balance coming out. It's expected that the trade balance will read slightly more negative than last month. It's expected that trade balance will come out at -1,000 million (-1 billion). If the trade balance reads at -1,500 or more negative, it would almost be the most negative reading in the last 6 months (October of 2006 we had a reading of -1508). So if it reads -1500 or more negative, I may possibly go short on AUD/USD, since it would be bad for the Australian dollar. If the reading reads at -500 million or less negative, it would be a relatively low trade deficit for Australia, so it would be good for the Australian dollar, so I may possibly go long AUD/USD. If my trigger is hit, we may see a move in the Australian dollar by about 35 to 40 pips. Unfortunately, unless you catch the spike on this report, I doubt that you can make much outside of it. You can try to look for 2nd waves, but generally speaking, 80% of the move happens in the first 15 to 20 seconds, and then there is consolidation with just slight price appreciation or depreciation.