UK SERVICES PMI

NEWS TRADING
Wednesday April 4, 2012
[4:30am NY Time]



We´ll be trading the UK Services Purchasing Manager Index
today at 4:30am (NY Time). This is a leading indicator
similar to the Manufacturing PMI that was released early
this week, here´s the forecast:

4:28am (NY Time) UK Services PMI
Forecast 53.5 Previous 53.8
ACTION: GBP/USD BUY 56.0 SELL 50.0





DEFINITION:
The Chartered Institute of Purchasing and Supply (CIPS) Services Purchasing Manager´s Index (PMI) measures the activity level of purchasing managers in the services sector, with a reading above 50 indicating expansion. A rising trend has a positive effect on the nation´s currency. To produce the index, purchasing managers are surveyed on a number of subjects including employment, production, new orders, supplier deliveries, and inventories. Traders watch these surveys closely because purchasing managers, by virtue of their jobs, have early access to data about their company´s performance, which can be a leading indicator of overall economic performance.



The Services PMI is tradable with a minimum deviation of 2.5~3.5 between the forecast and the actual release. If we get at least 56.0 or better, we could see some demand in the GBP and we will
 consider BUYING GBP/USD or GBP/JPY pairs. If we get a 50.0 or lower, GBP could weaken and we should look to SELL GBP/USD or GBP/JPY pairs. If the actual release is below 50 level, then we should jump in (spike trade) and SELL GBP/USD or GBP/JPY pairs.




Additional Thoughts
UK´s economy is 87% Services related. If we get a strong release on this PMI, we could see GBP sentiment turn bullish regardless of the fact that the PMI release doesnt change the long-term trend. As a leading indicator released early in the month, it helps to define the trend for the rest of the month.

Book : Attacking Currency Trends - Greg Michalowski

Book : Sentiment in the Forex Market - Jamie Saettele