Here we try to cover the key economic reports to be released this week and are widely expected to move the markets hence to bring opportunities based on the trading news strategies.
We select from Wednesday’s economic report the US durable goods orders to focus on and try to get a trading opportunity on the USD from this leading indicator, which measures the value of orders placed for relatively long-lasting goods.
Durable Goods, by nature often require large amount of spending and usually if it is increasing this represents an extended consumer optimism and confidence over the economic situation. So, it is sometimes taken as an early signal of a potential recession because when people become less optimistic about their future income they often delay the purchases of durable items such as automobiles and electric equipment, as in such cases consumers tend to direct their spending on necessities such as milk and bread.
We choose USD/JPY to trade the event depending on the headline figure with a minimum deviation of 0.5% between the forecasted number which is expected to expand by 0.5% and the actual
If the actual reading came higher than was expected at 1.0% or greater binary traders should buy the call options on the mentioned pair as USD sentiment will turn bullish especially against the Japanese Yen. Probably, against other majors but mixed correlation between the greenback and risk favors this cross. This matter is all about Fed’s easing prospects. The Federal Reserve has disappointed markets last week after refrained from launching the third round of its much anticipated QE program even though saying that it will remain open to more economic stimulus if needed, also extended the Operation Twist through the year-end. Although, the investors are currently sure that the resumption of quantitative easing program still on the table especially if labor markets keeps on deteriorating, but additional upbeat data would play down this assumption in near term. Therefore, better than expected retail sales and other important indicators would leave the US dollar riding on market sentiment to indicate fresh strength amid reducing liquidity forecasts.
On the other hand, if the released value came lower than forecasted at 0.0% or less, especially if dipped below the zero line we can activate put options on USD/JPY as it would confirm the idea that the U.S. still faces an increased risk of a slowing recovery, which should trigger fresh safe haven demand for the Japanese currency combined with retracing the recent dollar’s gains.
Release schedule: 12:30 (GMT); monthly.
Source of report: U.S. Census Bureau
Address of release: http://www.census.gov/indicator/www/m3/adv
The information in the above analysis is collected from different sources and should serve for informative purposes only. The author shall not be held responsible for the validity of the presented information. No part of this analysis recommends the purchase or sale of a currency pair or any other financial instrument.