Forex Fundamental Analysis - 16 October 2007


Fundamental Analysis



Tuesday, October 16th, 2007 (4:30 a.m. New York Time) UK
On Tuesday at 4:30 a.m. we will have UK CPI coming out of the UK. The number to focus on will be CPI y/y which is expected to come out at 1.9% versus 1.8% previous month. If it reads 1.7% or below, GBP/USD may possibly go down by 50 pips or more in the first hour of the report. On the other hand, if it reads 2.1% or above, GBP/USD may possibly gain 50 pips or more in the first hour of the report. Even if the deviation is only 0.1 meaning the reading is 2%, GBP/USD may possibly gain 30 pips or more in the first hour of the report. If the reading is 1.8%, same as last month, GBP/USD may possibly go down by 30 pips or more in the first hour of the report. It is possible that even with 0.1 deviation we will see 50 pips move but I want to make a conservative estimate.

SUMMARY:
* Report: UK CPI y/y
* Sell on GBP/USD if the number will be 1.7% or lower
* Buy on GBP/USD if the number will be 2.1% or higher
* If the trigger is hit, expect 50 pips or more in the first hour of the report.


Tuesday, October 16th, 2007 (5:00 a.m. New York Time) GERMANY, EURO ZONE
Right after UK CPI , at 5 a.m. we will have German ZEW report coming out. The ZEW has been disappointing me many times. It used to be a decent indicator but lately the Euro does not react to it as much as I would like. Be aware of this report because some brokers may widen spreads, and if you are in trades, your stops can be taken out.

Tuesday, October 16th, 2007 (8:30 a.m. New York Time) CANADA
At 8:30 a.m. New York time we will have U.S. Manufacturing Shipments coming out of Canada. There are expected to read at -0.9% versus 2.3% last month. If it reads -2.0% or more negative, that would be a quite bit loss after the previous month gain. In fact, it would almost wipe off the previous month gain. Based on that, USD/CAD may go up by 30 pips or more in the first hour of the report. On the other hand, if it reads at 0% or higher, that means a second month in a row we see a positive (or at least non-negative) reading, that would be considered pretty bullish, and USD/CAD may possibly go down by 30 pips or more in the first hour of the report.

SUMMARY:
* Report: Canadian Manufacturing Shipments
* Buy on USD/CAD if the number will be -2.0% or more negative
* Sell on USD/CAD if the number will be 0 or higher
* If the trigger is hit, expect 30 pips or more in the first hour of the report.

Tuesday, October 16th, 2007 (9:00 a.m. New York Time) CANADA
Then at 9 a.m. we will have interest rate statement coming out of Canada. It is expected they will not change the rates. If there is a surprise, and they will hike by 0.25, USD/CAD may possibly go down by 80 pips or more in the first hour of the report. If they will cut by 0.25, USD/CAD may possibly go up by 80 pips or more in the first hour of the report. That's extremely unlikely. What is important is the statement, and this is a little complicated to trade so I will not talk about it.


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