NZ RBNZ Interest Rates

March 13, 2013

NZ RBNZ Interest Rates

RBNZ Interest Rates decision will be another high impact release for the Kiwi, especially after

 the recent hawkish comments from Wheeler on potential intervention due to NZD’s excessive 

strength…  RBNZ (Reserve Bank of New Zealand) will be releasing the decision today and it is 

widely expected that Governor Wheeler of RBNZ will announce No rate changes, but then of 

course no rate change is needed to move the NZD if Wheeler were to take a hawkish or dovish

 stance with the accompanied statement, so I’d recommend traders to pay close attention to 

the comments immediately after the rate decision.

4:00pm (NY Time) RBNZ Interest Rates Decision Forecast 

2.50% Previous 2.50%

DEVIATION: 0.25% (BUY NZD 2.75% / SELL NZD 2.25% )

Definition:

The OCR (Official Cash Rate or RBNZ Interest Rates) influences the price of borrowing money 

in New Zealand and provides the Reserve Bank with a means of influencing the level of 

economic activity and inflation. An OCR is a fairly conventional tool by international standards.

The Trade Plan

Current forecast from economists surveyed by Bloomberg agree that RBNZ is likely to leave 

the official rate at 2.5% during this meeting; however, in the unlikely event that Governor 

Wheeler surprises the market and hike/cut rates by 0.25%, we should see an immediate strong

 volatility in the NZD which is a great opportunity to spike trade NZD.

Recommended Pairs : NZDUSD, NZDCHF

BOOKS 

How to Trade a Currency Fund: The Step by Step Guide 

That Shows How Anyone Can Trade a Fund - Jarratt 

Davis - EUR 14,79

Jarratt Davis  was ranked as the 2nd best performing currency trader in the world by the Barclay's currency trading index, between 2008 - 2013. He is one of the only fully verified institutional FX traders to share his techniques with other people. Jarratt works as a consultant to some of the top FX management companies in the city and continues to be an extremely popular speaker at Forex trading events worldwide. 

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How to Trade a Currency Fund - Jarratt Davis - EUR 13,31  

US NFP (Nonfarm Payroll) Employment

March 8, 2013

We´ll be trading the US NFP (Nonfarm Payroll) Employment Change, the US NFP report is the main focus of the week as traders look at this data to gauge current US and global economic recovery.  Postive US data will eventually lead to positive global data… Here´s the forecast:

8:30am (NY Time) US NF Employment Forecast 160K 

Previous 157K

8:30am (NY Time) US Unemployment Rate Forecast 7.9%

Previous 7.9%

Deviation: 70K (BUY USD 240K / SELL USD 90K)

DEFINITIONMeasures the change in number of employed people during the previous month, excluding the farming industry. A rising trend has a positive effect on the nation´s currency. Job creation is an important indicator of economic health because consumer spending, which is highly correlated with labor conditions, makes up a large portion of GDP. This report is the first of the month that relates to labor conditions, making it susceptible to big surprises.

The Trade PlanToday’s NFP Employment Change release 

is forecasted at 160K. The Unemployment Rate is expected

 to be at 7.9% after remaining at the same levels in the past

 few releases. If we get a significantly lower release on the 

NFP (90K or worse) and slightly higher Unemployment Rate 

(8.0% or more), I´d be looking to SELL the USD against 

stronger currencies as speculation for Feds to continue with

 QE should dominate the market. On the other hand, if we 

get a strong NFP release (240K or better) and the

 Unemployment Rate falls below 7.8%, USD could 

strengthen and I would BUY USD against other weaker 

currencies.

If we get a conflicting release, then well wait and see how the market reacts first. If there is an overwhelming sentiment driving the market, well get plenty of opportunities for an entry if we just wait for 5 minutes after the release; you´ll get a much clearer view.

ADP Nonfarm Payroll came out at 198K versus 170K on Wednesday with a backward revision of 192K to 215K, which means by adding the deviation of both the current month and last month, we have a combined surprise of 51K; add that to the 4-Week Average Initial Jobless Claims figure of 349K, we are definitely looking at a strong NFP and an inline Unemployment Rate releases…

Furthermore, both ISM PMIs beat expectations this month, especially the Non-manufacturing PMI, which beat the highest readings in a year (Feb 2012); the Employment Subindex of the Non-Manufacturing PMI was also positive at 57.2 vs 57.5 prior, and that means we could get similar employment gains in the services sectors as last month; and since the services is 72% of the total employment, this further supports a strong NFP release.

Following the optimism of the ECB Press Conference, I believe the following scenarios for the EURUSD:

1. Worse Than Expected NFP – should drive EURUSD up as continued support from the Feds via unlimited QE should help to weaken the USD and strengthen the Euro.
2. Inline With Expectation NFP – should drive EURUSD up as traders shift their focuses back to the positivity of the Euro, and of course, the very fact that the U.S. economy is steadily recovering should fuel risk appetite, thus driving the USD weaker in the process as USD is a safe-haven currency.
3. Better Than Expectation NFP – should drive EURUSD down in the short-term, depending on the release.  If the figure is extremely positive, somewhere around 270K ~ +300K, then we should see speculation rise of an early ending to QE3, thus driving the USD much stronger.  Of course, if we see 200K ~ 220K release, USD should rise a bit but will fall around the US open as market focus on risk appetite.

NFP Trading StrategyLet´s talk about how to trade this release: We´ll wait for the numbers to come out but continue to hold on a trade, Even if we get our tradable figures (238K to 88K). Wait for a possible revision of the previous release number of 158K, and market usually overreacts with the Revision and chances favor that a solid trade will present itself if we don’t get a conflicting releases between the revision and the actual release; at this point, still stay out of the market.

Then the next step is to wait for the Unemployment Rate, which is expected to be at 7.9%. If the Unemployment Rate were to surprise higher, we’ll have to make a decision based on the market sentiment coming into this release… Of course, if Unemployment rate were to fall below 7.6%, then we should see a surge in risk appetite as traders very much like to see lower jobless rates.

After all of the numbers have been released, wait for the market to push and wait patiently for a decent retracement before getting in. Look for recent support/resistance areas for entry as a high impact news with various components are extremely volatile, and those who are patient will always get a chance to enter with a much better entry.

BOOKS

Sentiment in the Forex Market: Indicators and Strategies to Profit from Crowd Behavior and Market Extremes - Jamie Saettele - EUR 46,00


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I recommend the book because of it introduces this subject in a very straight forward way, easy to understand and apply immediately in your trading routine. 

US ADP NFP Employment Change

March 6, 2013 

US ADP NFP Employment Change

ADP NFP (Nonfarm Payroll) release is a high impact release and it’s monitored by currency traders worldwide as they look for hints on Friday’s NFP official release. Here’s the forecast:

8:15am NY Time US ADP NFP Change Forecast 168K 

Previous 192K

Deviation: 50K (BUY USD 218K / SELL USD 118K)

Definition:ADP Employment report was developed and is maintained by Macroeconomic Advisers, LLC. It is a measure of employment derived from an anonymous subset of roughly 500,000 U.S. business clients. During 2011, this subset averaged about 344,000 U.S. business clients and represented over 21 million U.S. employees working in all private industrial sectors. The ADP NFP report is a monthly estimate of private nonfarm employment among companies in the United States with 1-49 employees and is a subset of the ADP National Employment Report. The data for both reports is collected for pay periods that can be interpolated to include the week of the 12th of each month, and processed with statistical methodologies similar to those used by the U.S. Bureau of Labor Statistics to compute employment from its monthly survey of establishments. Due to this processing, this subset is modified to make it indicative of national employment levels; therefore, the resulting employment changes computed for theADP National Employment Report are not representative of changes in ADP’s total base of U.S. business clients. (Taken from official ADPEmploymentReport.com…)

The Trade PlanI usually don´t trade this release but I use it for future trend references. However, if the deviation of 50K is actually hit, the market probably wont have a problem pushing it, and this will undoubtedly change market perception for the NFP release; therefore its best to be around your computer during the release time rather than find out what happened hours later and potentially miss the entire movement.

With the above being said, we´ll be looking for a deviation of 50K, so if we get 218K or better release, I´d be looking to BUY USD against the weakest currency ; if we get a 118K or worse, then I´d be looking to SELL USD against the strongest currency.

Traded pair	Expected figure	Deviation  trigger
	USDJPY	168 (k)	±50 (k)

	Buy	USDJPY	if actual figure is or is above	218 (k)
	Sell	USDJPY	if actual figure is or is below	118 (k)

Expected move during first 20 minutes after the release is 40 pips or more.

Recommended Pairs: EURUSD, NZDUSD, USDJPY.

USD/JPY - US Dollar / Yen

Resistances : Weekly 94.6 ; Daily 94.05 ; Hourly 93.5

Supports : Weekly 92 ; Daily 92.45 ; Hourly 92.9

BOOKS :

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With the above being said, we´ll be looking for a deviation of 50K, so if we get 218K or better release, I´d be looking to BUY USD against the weakest currency

US Existing Home Sales

February 21, 2013

US Existing Home Sales

US Existing Home Sales is expected to remain unchanged 

from the previous month. Here’s the forecast:

10:00am Existing Home Sales Forecast 4.91M Previous

 4.94M

DEVIATION: 0.4M / 400K (BUY USD 5.31 / SELL USD 

4.51M)

Definition:“Measures the annualized number of existing residential buildings that were sold during the previous month. A rising trend has a positive effect on the nation’s currency because large purchases tend to be made by consumers that are optimistic and confident in their financial position. The sale of a home also triggers commissions for real estate agents, and often home owners will purchase goods such as appliances and furniture shortly after purchasing a home. Traders watch this report closely as it’s the month’s first demand-side housing indicator to be released.”

The Trade PlanBecause the Housing sector is one of the most foundamental components of the U.S. economy, this release will certainly cause some volatility in the market, especially if our tradable figures (+/- 400K) were hit. With the focus of world on the status of U.S. housing sector, this release may bring about a strong sentiment of risk appetite/aversion if our BUY/SELL trigger is hit…

If our buy tradable deviation is hit, or 5.31M figure is released, we should look to BUY USD after the release. If our sell tradable deviation is hit, or 4.51M figure is released, we should look to SELL USD.

Recommended Pairs : EURUSD, NZDUSD

USD/JPY - US Dollar / Yen

Resistances : : Weekly 93.85 ; Daily 93.5 ; Hourly 93.15

Supports : : Weekly 92.25 ; Daily 92.65 ; Hourly 92.8

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UK CPI

February 12, 2013

UK CPI

We´ll be trading the UK Consumer Price Index (UK CPI) release at 4:30am NY Time today. We´ll be looking at the yearly release figure and the market could react with lots of volatility as CPI is the basic measurement of Inflation, therefore expect to see more exaggerated moves if we get a huge surprise release. Here is the forecast:

4:30am NY Time UK CPI y/y Forecast 2.7% Previous 2.7%

DEVIATION: 0.3% (BUY GBP 3.0% / SELL GBP 2.4%)

Definition “CPI, Consumer Price Index, is a statistical estimate of the movement of the prices of goods and services bought for consumption purposes by households. Its computation uses price data collected for a sample of goods and services from a sample of sales outlets in a sample of locations for a sample of times and estimates of the shares of the different expenditures in the total covered by the index which are usually based upon expenditure data obtained for sampled periods from a sample of households Wikipedia).” It is also known as the “True Cost of Living”.

The Trade PlanWe are looking for a variable deviation of 0.3%. If the Inflation number remained above 3.0%, which is over BOE´s inflation target, we will BUY GBP. If the Inflation number decreases to 2.4% or less, we´ll look to SELL GBP. Historically, even with a slight difference of 0.1%, market usually overreacts. If our deviation is hit, there is a strong possibility that the market will move 50 pips immediately.

Traded pair	Expected figure	Deviation  trigger
GBPUSD	2.7 (%)	±0.3 (%)

Expected move during first 30 minutes after the release: 20 pips or more

Actions:

	Buy	GBPUSD	if actual figure is or is above	3.0 (%)
	Sell	GBPUSD	if actual figure is or is below	2.4 (%)

Recommended Pairs : GBPUSD, GBPCAD.

GBP/USD - British Pound / US Dollar

Resistances : Weekly 1.5735 ; Daily 1.5695 ; Hourly 1.5655.

Supports :  Weekly 1.558 ; Daily 1.56 ; Hourly 1.564

The Best of Books

Currency Trading in the FOREX and Futures Markets - 

Carley Garner - EUR 25,31 

Carley Garner has created the perfect book for anyone interested in getting started in currency trading. Whether you are an experienced trader of stocks or options looking to diversify markets you can trade or you are completely new to trading in general this book will get you on the right path very quickly.

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I strongly advise any trader interested in trading currency markets to first read this book by Carley Garner before you venture into those waters.
Currency Trading in the FOREX and Futures Markets - Carley Garner - EUR 25,31

CAD Employment Change

February 8, 2013 

CAD Employment Change

We´ll be getting the Canadian Employment Change release number tomorrow, here is the forecast:

8:30am (NY Time) CAD Employment Change Forecast

 4.2K Previous 39.8K

Unemployment Rate 7.2% Previous 7.1%

DEVIATION: 25K (BUY CAD @ 30K / SELL CAD @ -20K)

DEFINITION “Measures the change in number of employed people during the previous month. A rising trend has a positive effect on the nation´s currency. Job creation is an important indicator of economic health because consumer spending, which is highly correlated with labor conditions, makes up a large portion of GDP. This report is the first of the month that relates to labor conditions, making it susceptible to big surprises.”

The Trade Plan

The CAD Employment Change report will be released at 8:30am sharp today (changed from the usual 7:00am). What I am looking for is a minimum deviation of around 25K, or the difference between the Forecast number (4.2K) versus the actual release number; if we get a positive 30K of release, we should see demand for the CAD rise, therefore we should BUY CAD against weaker currencies at the time; however, if we get a negative deviation, such as -20K or worse, we should see some weakness in the CAD, and that will be my cue to SELL CAD against stronger currencies at the time.

I´ll also pay close attention to the unemployment rate, which is expected to rise to 7.2%. As long as this number does not conflict with the Employment Changes, we should follow the direction of the news release. If we get a conflict, such as better Employment Changes but higher Unemployment Rate, then we´ll need to look at the context of the market before taking the trade.

Expected move during first 20 minutes after the release: 40 pips or more

Actions:

	Buy	USDCAD	if actual figure is or is below	-15.5 (k)
	Sell	USDCAD	if actual figure is or is above	24.5 (k)

Recommended Pairs : USDCAD, GBPCAD.

USD/CAD - US Dollar / Canadian Dollar

Resistances : Weekly 1.0035 ; Daily 0.999 ; Hourly 0.995

Supports : Weekly 0.99 ; Daily 0.992 ; Hourly 0.993

The Best of Books

Forex Currency Trading : Underground Hidden Strategies and

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