Today’s FOMC Meeting has the potential of changing the Long-Term market sentiment for the USD, but you should not hold your breath because Bernanke could take his time and delay any announcements for QE3 at a later meeting… What’s interesting is the Press Conference at 2:15pm, where Bernanke will be grilled by onsite media members for live Q&A, and if Bernanke wants to make any not-so-subtle comments on QE3, we will be there to trade it…
Forex News
UK quarterly GDP release is always a high impact report. With this being the Prelim release, or the first release of three, we are likely to see more market participation. Here is the forecast number:
4:30am (NY Time) UK Revised GDP q/q Forecast 0.1% Previous -0.3%
ACTION: GBP/USD BUY 0.4% SELL -0.2%
US New Home Sales usually follows the trend of Existing Home Sales, therefore we´re likely to see an inline release today.
Here is the forecast:
10:00am NY Time New Home Sales Forecast 320 Previous 313K
ACTION: 390 BUY USDJPY/ 250 SELL USDJPY
The Trade Plan
We´ll trade this release using a deviation of 70K; if the release is lower, it would strengthen USD aversion sentiment and we should look to SELL USDJPY. A stronger number could provide temporary support for the pair and we may see a slight rally in USD therefore we should look to BUY USDJPY.
Here is the forecast for the US Advanced GDP q/q :
8:30am (NY Time) US Advance GDP q/q
Forecast 2.5% Previous 3.0%
ACTION: SELL EURUSD 3.3% / BUY EURUSD 2.6%
The Trade Plan
We are looking for a deviation between 0.3% ~ 0.5% from the forecasted figure of 3.0%. Therefore if we get a 3.3% on the 1st quarter GDP, it would be US Dollar positive. We will SELL EURUSD. However, if we get a 2.6% release or worse, then we would be BUY EURUSD. We’ll be looking to trade this release based on my Retracement Trading Method; since this is a high impact release, strong market volatility is expected immediately after the release.
Retail Sales is usually a very tradable release as traders draw direct correlation between retail activities with economic health.
Here´s Forecast:
8:30am Core Retail Sales Forecast 0.8% Previous -0.5%
ACTION: USD/CAD BUY 0.2% / SELL 1.2%
The Trade Plan
I´m going to be looking for a deviation around 0.4 ~ 0.5% for this news. Since the forecast is at 0.8%, a reading of 0.2% would be negative for the CAD and we´ll be looking to BUY USD/CAD; however, if the opposite is true, or a 1.0% (or better) of actual release, I´ll be looking to SELL USD/CAD.
CPI is also known a Inflation and our focus will be on the Core Inflation figure, also known as CPI excluding Food and Energy, or CPI ex Volatile Items…
Here´s the forecast:
8:30am CA Core CPI m/m Forecast 0.3% Previous 0.4%
ACTION: USDCAD BUY 0.0% / SELL 0.5%
The Trade Plan
The Core CPI report will be released today and our deviation for this release, based on a historical track record, around 0.3%. Therefore, look for tradable figures of 0.0% or worse to BUY USD/CAD, or a +0.5% or better to SELL USD/CAD.
Today´s Retail Sales number from UK will be widely watched as this is a high impact yet very tradable report. Here is the forecast for this release:
4:30am (NY Time) Forecast 0.4% Previous -0.8%
ACTION: GBP/JPY BUY 0.8% SELL -0.2%
The Trade Plan
The monthly retail sales report is a direct measurement of consumer activities at the retail level. A higher release is generally good for the economy, and better for it´s currency; a lower release is considered negative for the economy and not good for it´s currency.
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
US FOMC Meeting Minutes – May 16, 2012 – Forex Strategy
Forex Trading Strategies #5 – Market Psychology
Forex Trading Strategies #2 – The Right Timing
US Core CPI – May 15, 2012 – Forex Strategy
Forex Trading Strategies #1 – The Real Reason