POSSIBLE TRADE OPPORTUNITES

Good morning, Let's review what happened yesterday.

The first indicator we had was UK Manufacturing PMI. Since there was some deviation, the price moved about 30 pips but it did not hit our trigger so it was a no trade.

Then we had U.S. ISM Manufacturing which hit a big downside trigger. It came out at 47.7 so it was the lowest reading since sometime in 2003, and it was a big buy signal. EUR/USD traded in the range of 1.4665 to 75 for quite a bit so there was plenty time to get in quite relatively close to the pre-release price. Then, it went up to 1.4750 within 90 minutes so it moved almost 90 pips from that level without much retracement at all. It was awesome trading opportunity, and I hope you made money on this. Due to a huge deviation, even USD/JPY worked very well moving 158 pips although I did not recommend you to trade that pair. GBP/USD did not react too well as pound was much weaker than euro before the report.

Then we had U.S. FOMC Minutes. We got what we were expecting: it was dovish but there were some mixed comments there. I thought it would weaken the dollar but it did not really end up that way. It was just not clear enough to generate decent price actions.

Tomorrow we will have two trades I will be looking at.

1. Thursday, January 3rd, 2008 (8:15 a.m. New York Time) USA
At 8:15 a.m. New York time we will have U.S. ADP Employment Change. That is expected to come out at 47.5 K, and I see 33K expected from another source so that numbers may change as we are approaching to the report. Last month it came out at 189K, and it was a great trade. To be safe, a reading of -20K or more negative would be weakening the U.S. dollar in general. A reading of 100K or higher would be strengthening the U.S. dollar. I would trade this on USD/JPY. I would look to buy USD/JPY on reading of 100K or higher, and sell USD/JPY on a reading of -20K or more negative.

2. Thursday, January 3rd, 2008 (8:30 a.m. New York Time) USA
Then at 8:30 a.m. New York time we will have U.S. Unemployment Claims which is expected to come out at 345K. It is a weekly indicator and recently more people are focused on it. If it comes out at 360K or higher, that should be weakening for the dollar, and it would constitute a sell signal on USD/JPY, good for 15 to 40 pips. If it comes out at 330K or lower, it would be strengthening the U.S. dollar, and it would be a buy signal on USD/JPY, good for 15 to 40 pips.

That would be all for tomorrow

TODAY 2ND JANUARY FORECASTS

Let's first review what happened on December 31st, 2007.

We had U.S. Existing Home Sales. It was expected to come out at 4.97M but originally when I recorded my signal, it was 5.00M so we were looking at 5.2 M to get into the trade. This trigger was not hit so that was a no trade.

Tomorrow we will have 3 indicators that are worthy watching and possibly trading.

1. Wednesday, January 2nd, 2008 (4:30 a.m. New York Time) UK
First one is UK Manufacturing PMI at 4:30 a.m. New York time. This indicator had gone a little cold towards the end of the year but last month it had a good price action. The deviation was 1.9 (if I remember correctly) and it moved GBP/USD by about 60 pips. Tomorrow it is expected to come out at 53.9. If it comes out at 55 or higher, I would like to buy GBP/USD or GBP/JPY, expecting about 35 and 50 pips or more, respectively. On the other hand, if it comes out at 52.5 or lower, I would like to sell GBP/USD or GBP/JPY, expecting 35 and 50 pips, respectively.

2. Wednesday, January 2nd, 2008 (10:00 a.m. New York Time) USA
At 10:00 a.m. we will have U.S. ISM Manufacturing. It is expected to come out at 50.5. On this indicator I would like to use 1.2 deviation so if it comes out at 51.7 or higher, I would look to sell either EUR/USD or GBP/USD. If it comes out at 49.3 or lower, I would look to buy EUR/USD or GBP/USD. I would expect 30 pips price action on EUR/USD and 40 pips price action on GBP/USD if the trigger is hit. You can also trade USD/CHF (reverse triggers) but I would stay away from USD/JPY as this one behaves kind of weird with this report. Sometimes USD/JPY moves like crazy, some other times it does not move at all on this indicator.

3. Wednesday, January 2nd, 2008 (2:00 p.m. New York Time) USA
At 2:00 p.m. we will have U.S. FOMC Meeting Minutes. On Dec 12th, they voted for a 0.25 cut on U.S. interest rates one of the voters voted for 0.50 cut. If you are interested in trading this report, please watch the video.

That would be all for today.Thank you very much, and good luck with your trades.