Wednesday, January 30th, 2008 (8:15 a.m. New York Time) USA
First, we will have U.S. ADP Employment Change. I usually say trade it with 75K or even 100K trigger. However, I don't recommend to put any trade on this report unless you know what you are doing. All because of the U.S. Interest Rate statement that is coming out at 2:15 p.m. so it is hard to judge how the market will react on the ADP indicator right before the interest statement.
Wednesday, January 30th, 2008 (8:30 a.m. New York Time) USA
Then at 8:30 we will have the GDP Annualized q/q which is much more powerful that the ADP. It is expected to come out at 1.2% for the 4th quarter. I would trade this with 0.5% deviation. Keep in mind that even with 0.5 deviation (which is significant) sometimes it hits only 20 to 30 pips target on the EUR/USD or USD/CHF. This is also a situation where you may want to stay out. I personally will be trading it put I will also put less money than usually on this trade. If it coms out at 1.7% or better, I would look to buy the USD/JPY. If it comes out at 0.7% or lower, I would sell USD/JPY, looking for about 30 pips price action. It may make more pips but I would just be careful here. Why? The interest rate decision at 2:15 p.m....
Wednesday, January 30th, 2008 (2:15 p.m. New York Time) USA
Then at 2:15 p.m. we will have U.S. Interest Rate Statement coming out. Currently it is at 3.50%, and it is expected they will cut it off down to 3.00%. Based on my sources, 75 to 80% chance they will cut by 0.50%, and about 20 to 25% chance they will cut only by 0.25%. Keep in mind that a week ago on Tuesday they lowered the rates by 0.75% from 4.25% to 3.50%. That means that in a matter of a few days they would cut the rates by as much as 1.25% so there is a lot of worries and no one wants to put any bigger bet on one or another direction. Here is how I would trade it: if they cut by 0.75% from 3.50% to 2.75%, that would be a very weak signal for the U.S. dollar so you may want to sell USD/CHF or buy GBP/USD or buy AUD/USD or buy EUR/USD, looking for a ton of pips such as 60 or 70 pips, potentially more. This is, however, highly unlikely. Also, if they keep the rates unchanged at 3.50%, it is going to be very good for the U.S. dollar, and I would stay away from the USD/JPY and I would focus on GBP/USD, AUD/USD or EUR/USD to sell them. This also would give a lot of pips. If they cut only by 0.25%, that would be a surprise because the market expects a cut by 0.50, so it also would be good for the U.S. dollar and disappointing for the equity market, and you would have a good selling opportunity on EUR/USD, GBP/USD or AUD/USD, looking for about 40 to 50 pips. If they cut by 0.50% that would be as expected but it would bring some relief to the market so I think it could be a buying opportunity on GBP/USD, EUR/USD or AUD/USD even if it is as expected. Trade less money on as expected signal but still you can give a try; however, do not rush into the trade.
