As we end this week and get ready for an extremely busy next week, it’s important to know that today is the end of the week, month, and the 3rd quarter of 2011. We are seeing defensive order flows as traders demand safe-haven currencies such as the USD and JPY, while high yielders like AUD and NZD are getting sold off across the board. With the market likely to exaggerate as usual, I believe we should see a possible rebound towards the early part of the week. Of course, with over 13 high-impact news scheduled, let’s use more caution than usual as the market could be extremely volatile.
General
Last week we saw market took a turn for the worse as concerns over European debt crisis intensified. The Fed announced the highly anticipated “Operation Twist” but failed to convince the market that the new measure would indeed stimulate economy. IMF issued its world economic outlook, highlighting the current situations in both U.S. and Europe have high risks of slipping back to recession. While in Asia, China’s growth seemed to have reached a plateau as its recent PMI showed contraction in the economy.
Manufacturing PMI is a leading indicator that is usually released early in the month. Traders pay attention to this release for surprises as this survey may help to shape the general trend of the currency for the rest of the month. Here is the forecast:
4:30am (NY Time) UK Manufacturing PMI Forecast 49.0 Previous 49.1
ACTION: GBP/USD BUY 51.0 SELL 47.0
Here’s the FOMC Statement - the result of the meeting. What we are going to get today is the Minutes of the meeting, or the process that led to the final statement.
“Release Date: August 9, 2011
We´ll be getting the Retail Sales figure from Australia today once again, and if you´ve been following news out of Australia, you´d know that Retail Sales has been a sticky point for Aussie economy and a strong improvement may change the short term trend for the currency. Here´s the forecast:
9:30pm NY Time AU Retail Sales Forecast 0.4% Previous -0.6%
ACTION: AUD/USD BUY 0.9% SELL -0.1%
The economy struggled to maintain any consistency last week as global manufacturing dropped significantly across the globe due to weak demand amidst high energy costs. U.S. consumer confidence remained low according to the Bureau of Labor Statistics. They also reported a dismal Nonfarm payroll release. Yet, the U.S. reported a positive ISM Non Manufacturing PMI release which indicates that purchasers remain optimistic for the summer.
Canada’s Feb. GDP was revised to -.1% from -.2%, and Mar. GDP came out at +0.3%. Still, BOC policymakers decided to hold on interest rate hikes but are focusing on the medium term outlook as economic progress remains on an optimistic trend.
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 54.4 Previous 54.3
ACTION: GBP/USD BUY 57.0 SELL 52.0
Forex Market Review and Upcoming Forex Calendar (May 14 ~ 18, 2012)
Forex Trading Strategies #3 – The Correct Trend
Forex Trading Strategies #4 – Support and Resistance
Forex Trading Strategies #5 – Market Psychology
US FOMC Meeting Minutes – May 16, 2012 – Forex Strategy
Forex Trading Strategies #2 – The Right Timing
US Core CPI – May 15, 2012 – Forex Strategy
Forex Trading Strategies #1 – The Real Reason