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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:
4:30am (NY Time) UK Services PMI Forecast 53.5 Previous 53.8
ACTION: GBP/USD BUY 56.0 SELL 51.0
RBA (Reserve Bank of Australia) is expected to keep borrowing costs unchanged at 4.75%, as per the wide market consensus…
Here´s the forecast for this news release:
12:30am (NY Time) AU RBA Rate Decision Forecast 4.75% Previous 4.75%
ACTION: AUD/USD BUY 5.00%
The Trade Plan
If RBA hikes rates, we should jump in (spike trade) and buy AUDUSD or other AUD crosses as the expectation for a rate hike is very unlikely. If RBA decides to keep rates unchanged, we may see a sell-off as the accompanied RBA statement may be dovish in light of recent news events.
Considering that July 1 is the start of a new quarter, new month, and new beginning for the second half of 2011, market reacted exactly as one would expect, with optimism and risk appetite…
The most important development for the week was undoubtedly the sovereign debt situation in Greece. With the passing of both bills (Asterity Plan and Implementation) in Greece Parliament, investors can feel relieved as default has been averted. The next important market mover will be ECB’s rate decision on Thursday, followed by NFP from US on Friday.
This week turned out to be another week driven by risk aversion as concerns of Greek debt crisis dominated the market… and once again it affected the Euro negatively. With Greece PM Papandreou having survived the No Confidence vote, which in turn paved the way for the Austerity Plan vote on Tuesday, the entire market is finally seeing some hope for the Euro and preparing for the inevitable rate hike in early July by ECB.
We’ll be getting the Canadian Employment Change release number tomorrow, here is the forecast:
7:00am (NY Time) CA Employment Change Forecast 28K Previous 15.1K
Unemployment Rate 7.7%
ACTION: USDCAD BUY -5K SELL 60K
The Trade Plan
Canadian Employment Change report will be release at 7:00am sharp today. What I am looking for is a minimum deviation of around 30K, or the difference between the Forecast number (28K) versus the actual release number; if we get a positive 60K of release, we should see demand for the CAD rise, therefore we should SELL USD/CAD; however, if we get a negative number, such as -5K or worse, we should see some weakness in the CAD, and that will be my cue to BUY USD/CAD pair.
The present market is still rather focused on the risk aversion development in the Middle East and there are now possibilities of spilling over to Saudi Arabia. But a closer look at the current market situation convinces me that the tension will ease eventually as the situation in Libya is likely to be resolved (3-7-11 9:31am Arab Press stating that Kaddafi is negotiating with opposition) soon and the economy in Saudi Arabia is in a totally different state than Libya, civil unrest is not likely to escalate to civil war and interrupt crude supplies.
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:
4:30am (NY Time) UK Services PMI Forecast 54.0 Previous 54.5
ACTION: GBP/USD BUY 56.5 SELL 51.5
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