Forex Fundamental Analysis - 18 October 2007

Fundamental Analysis


Thursday, October 18th, 2007 (4:30 a.m. New York Time) UK
Tomorrow at 4:30 a.m. New York time we will have UK Retail Sales coming out. For several months in a row we saw a strong retail sales numbers. Last month we had 0.6%, after 0.7% the previous month. This month they are expecting only 0.1% which would be a normal retracement after all the gains of last 4 months. If it comes at -0.2% or more negative, I think GBP/USD may possibly go down by 30 pips or more in the first hour of the report. On the other hand, if the retail sales comes out at 0.4% or more positive, I think GBP/USD may possibly gain 30 pips or more in the first hour of the report. If the deviation is bigger, such as 0.6% or higher, then GBP/USD may possibly gain as much as 50 pips or more, and if we see a reading of -0.4% or more negative, I think a move of 50 pips or more is also possible. I would wait for the spike, then try to get in within 15 to 20 pips of the pre-release price, depending on the deviation. If the deviation is small, such as 0.3 either direction, I would try to get in within 10 pips of the pre-release price.

SUMMARY:
* Report: UK Retail Sales
* Sell on GBP/USD if the number will be -0.2% or more negative
* Buy on GBP/USD if the number will be 0.4% or more positive
* If the trigger is hit, expect 30 pips or more in the first hour of the report.
* Read more info regarding conservative triggers.

Thursday, October 18th, 2007 (7:30 a.m. New York Time) CANADA
Then at 7:30 a.m. New York time we will have Bank of Canada monetary policy report. Skip this one unless you really know what you are doing. Right now they expect that Canada is very happy with the interest rates of 4.50%. If for some reasons Bank of Canada talks about a possible need of another rate hike, I think USD/CAD may possibly go down by 50 pips or more in the first hour of the report. On the other hand, if Bank of Canada talks about a possible need for a rate cut because the currency is too strong, then USD/CAD may possibly gain 50 pips or more in the first hour of the report.

Thursday, October 18th, 2007 (10:00 p.m. New York Time) USA
Then at 12 p.m New York time we will have Philadelphia Fed Manufacturing Index coming out. I will not be trading this one. Just be aware of possible higher spreads and price actions if you are in your regular trade. Manufacturing is not important, especially if it is a small indicator like this one.

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