Today’s Retail Sales number from UK will be widely watched as this is a high impact yet tradable report. Here is the forecast for this release:
4:30am (NY Time) Forecast 0.5% Previous 0.6%
ACTION: GBP/USD BUY 1.0% SELL -0.1%
The Trade Plan
Retail Sales by definition is a direct measurement of consumer activities at the retail levels. A higher release is generally good for the economy, and better for it’s currency; a lower release is considered as negative for the economy and not good for it’s currency.
Our tradable deviation or surprise factor for UK Retail Sales is 0.5% to BUY and 0.6% to SELL. If our deviation is hit, we can expect the market to move at least 50 pips within the hour, with a historical accuracy of 72%. We’ll be looking to BUY GBP/USD if we get a 1.0% or better release, and SELL GBP/USD if we get a -0.1% or worse.
In today’s market traders sold off GBP yesterday on mixed outlook in the UK’s economy but recovered sharply after BOE Sentance’s bullish comments on the fact that market should not dismiss an end of the year rate hike from BOE. However, GBP suffered again after the release of today’s MPC meeting minutes, which showed a 7-1 vote against Sentance. This led to GBP/USD dropping down to the 1.5200… GBP lost further against USD during Fed. Chief Bernanke’s testimony over the “unusual uncertainty” over the economic recovery. Traders responded by buying US Treasuries.
Additionally, BOE Sentance did raise a valid point, especially after the amount of government spendings and budget cuts which will definitely help UK’s economy and solidify its fundamental outlook in the long run. I believe the situation in UK is looking better and we should see strong resilience in the Sterling. However, the current risk aversion sentiment may continue and weigh down on all risk assets and commodity currencies, therefore we may see some decline in the Sterling for one or two sessions, but it’s my opinion that GBP should recover as soon as we get a positive news catalyst.
I’d be looking to go LONG on GBP/JPY if this pair falls close to the 130 as GBP should strengthen and JPY should weaken in the mid to long term outlook…
Here’s a video of my previous UK Retail sales trade:
Related posts:
- Trade Plan For UK Retail Sales 05/20/10
- Trading Plan For UK Retail Sales 06/17/10
- Forex Trading Plan For UK Retail Sales 04/22/10
- Forex Video & Analysis For UK Retail Sales 8/19/20
- Forex News Trading Plan For UK Retail Sales m/m 11/18/10
- UK Retail Sales m/m 01/22/10
- UK Retail Sales 03/25/2010
- Forex News Trading UK Retail Sales m/m 01/21/11
- Forex News Trading UK Retail Sales m/m 02/18/11
- Forex Analysis For UK Retail Sales 07/21/11
{ 10 comments… read them below or add one }
Great work Henri ! I was wondering is it possible to follow you in your trades ?
I am a beginner,I fall in love with your fundamental analysis,It is great and I want you to keep it up.There is one thing I don’t understand is that you said there is no trade on but you still make some pips out it;how did you come about that?
It is a no trade based on news trading. But because of the way that the market was reacting, it was clear we will see a strong GBP after the release. SO I took a trade immediately after.
Hi Henry Liu
I m new and still learning with yr comments.
Pls correct me if I am wrong :
For the 22 July 4.30 UK figures – the result is 0.7%
4:30am (NY Time) Forecast 0.5% Previous 0.6%
ACTION: GBP/USD BUY 1.0% SELL -0.1%
Therefore NO TRADE. Am I right?
Thanks.
Yes it would be no trade. But of course if you look at the context of the market it would actually be a BUY trade. But you are right at your interpretation of my trade plan.
what to buy and selll.
I Want to know what to buy,what to sell,and the time to buy or sell
Hi Henry,
Tanx for ur Forex daily analysis. Its been quite revealing and I quite appreciate it. However, i’ll like u to add trade ideas for each daily currency pair regarding entry and exit prices.
Regards.
Hennry we were wundering if an opeing has come up to join you in your tradeing room? We had left our e-mail to be on standby. Thank You.
I am planning something on the first week of August. I’ll let you guys know then.