Here is a basic plan to trade US Core Retail Sales which is scheduled to be released at exactly 8:30am NY Time, and here are the forecasts:

8:30am (NY Time) US Core Retail Sales                Forecast 0.2%      Previous 0.4%
ACTION: USD/JPY  (CORE)                                            BUY 0.8%                 SELL -0.4%

We’ll be focusing on the Core Retail Sales figure out of U.S. today. Since we have both retail sales (healine and core, also know as ex auto) scheduled to be released at the same time, we should concentrate on the Core Release as it’s a better picture of the retail activities.  However, it’s important to make sure there is no conflict between both releases or we should just stay out of the market until a new direction has been established.

Current market condition is somewhat driven by risk appetite as result of ECB Trichet’s Press Conference yesterday.  With Retail Sales being a huge component of GDP (2/3 of GDP is based on Retail Sales in the U.S.), a strong release will definitely add to the risk appetite sentiment… However, a weak release will probably bring back concerns over U.S. economic recovery, much like what took place during NFP, where JPY gained across the board.

The plan to trade this release is straight forward.  We are going to wait for 0.8% of release or better to BUY USD/JPY (sell JPY), or a -0.4% or worse to SELL USD/JPY (buy JPY)… If we get a in-between release, we’ll need to look at the pre-release market condition in order to make a decision, or just stay out of the market altogether. 

DEFINITION RETAIL SALES:

“(Retail Sales Core) Derivative of Retail Sales that excludes the Automobile Sales component. Automobile Sales make up roughly 25% of Retail Sales, but they can be very volatile from month to month and can distort the picture. Retail Sales with the exclusion of this volatile component is thought to be a better indicator of the underlying trend in consumer spending.”

Related posts:

1. US Core Retail Sales m/m 11/16/09
2. US Core Retail Sales m/m 10/14/09
3. US Core Retail Sales m/m 12/11/09
4. US Core Retail Sales m/m 09/15/09
5. US Core CPI m/m 11/18/09
6. Australia Retail Sales Trading Plan 05/31/10
7. Forex Trading Plan For UK Retail Sales 04/22/10
8. Trade Plan For UK Retail Sales 05/20/10
9. Australian Retail Sales m/m 01/06/10
10. US CPI m/m 10/15/09