News Trading Signal for Today, 11th January 2007

Hello Good morning, how are you doing today. How were your trades yesterday, I hope you were able to catch some pips.
Okay, to the business of today but before then, let's first review what happened yesterday.

The UK Trade Balance barely deviated so we had a no trade. As simple as that.

Then the UK kept the rates unchanged at 5.50% as expected by most economists. I said it could give some strengthening to the British pound but it would not be reliable. What happened was there was a 60 pips spike up; however, it last only for 15 minutes before starting retracing and making new lows. You could have made some pips out of it but I think it would be unnecessary risk to take. Nevertheless, if you made money anyway, congratulations.

The Euro Zone also left the rates unchanged so another no trade here.

At 8:30 Trichet did not say anything surprising so it was a yawn speech and also a no trade.

The Initial Jobless Claims was at least quite interesting. The consensus was modified down from 345 K to 340 K. Once I saw that, I corrected it on the daily signals and provided new triggers. If you traded old triggers, it would be a loss; if you used a new set of triggers like we did in Diamonds room, it would be a no trade. We had 12 pips price action up, and then it started going the other way. I hope you either adjusted your trigger or at least had an appropriate stop loss. A good lesson that you might learnt from it is to make sure the consensus did not change right before the report as this text is usually written and send hours or sometimes even days before the report.

The Building Permits in Canada was also very interesting. It came in very negative: -9.9%, completely erasing the surprising gain that happened last month. We were looking to sell at -6.7% or lower. The price moved very quickly so frankly speaking when trading myself I missed a good entry here although it was still possible to make decent pips. To make the long story short, overall it moved 50 pips within 1 hour.

At 1 p.m. Bernanke was scheduled to testify. His comments were leaked at 12:16 p.m. In the first minute or so it moved 8 pips as it was unexpected but as people starting realizing what happened, EUR/USD moved up from 4740 to 4810 so about 70 pips move in the 45 minutes leading up to the report. If you had a news provider and you were aware of this, and in fact you made a trade, good for you. If you, however, showed up at 1 p.m. and looked at comments, you already missed the boat.

Let's now talk about Friday.

At 4:30 a.m. we will have U.K. Industrial Production. It is expected to come out at 0.1%. I recommend trading a 0.4 trigger although a 0.3 deviation sometimes work OK. If there is a 0.4 deviation either way, you can expect 40 pips price action on GBP/USD. So, if it comes out at 0.5% or higher, I would buy GBP/USD or GBP/JPY. On the other hand, if it comes out at -0.3% or more negative, I would sell GBP/USD or GBP/JPY or even GBP/CHF.

At 7 a.m. we will have Canadian Employment Change coming out. This is one of the strongest and most powerful indicators of the month. It is expected to come out at 15 K. If there is a 15 K deviation, I think it is worthy to trade. So, if it comes out at 0 K or negative, I would buy USD/CAD. If it comes out at 30 K or higher, you want to sell USD/CAD. The amount of price action solely depends how big the deviation is. If it is just 15K deviation, I would expect about 45 pips price action on USD/CAD. If it is 30 K or more, you can expect 70 or 100 pips on USD/CAD. What I noticed is over past 15 months we saw a lot of very positive deviations on CAD employment change so you may want to sell a small unit of USD/CAD right before the report and set up an appropriate SL in case it comes out the other way.

We also have U.S. and Canadian Trade Balance and U.S. Import Price Index at 8:30 a.m. I would focus on the Canadian Trade Balance. Of course, what happen on Canadian Employment Change may influence this trade but anyway I think 1.0 trigger is sufficient to trade the Canadian Trade Balance. If it comes out at 4.2B or higher, you may want to sell USD/CAD. If it comes out at 3.2 B or lower, you may want to buy USD/CAD. I would look at 30 pips price action on that report. The U.S. Trade Balance and Import Price Index are not big movers. If anything, they may either help a little or if they conflict, they will give you a good price to get in Canadian Trade Balance.

That would be all for Today.

Have a great day.