Forex Trading Signals by Magister Pips, 2012/01/24
0830 CAD Retail Sales Less Autos MoM (Core) (+0.2% expected, +0.7% prior, -0.1% to +1.0% estimate range)
range spread: 1.1 vs 0.8 last most:-0.1 to +0.4
Top 4 rated analysts estimates*: 1st -0.1% 3rd -0.1% (2nd and 3rd did not give estimate this month)
Affliated Reports:
CAD Retail Sales m/m (+0.2% expected, +1.0% prior, -0.3% to +0.8% estimate range)
range spread: 1.1 vs 0.9 last most: -0.2 to +0.3
Top 4 rated analysts estimates*: 1st +0.2% 2nd +0.2% 3rd -0.1% 4th -0.2%
Last month a +0.5 deviation on the headline and core (Headline: +1.0 vs +0.5 exp / Core: +0.7 vs +0.2 exp),
came with a revision to the previous month of -0.1 on Core (+0.4 revised from +0.5 previous) but headline
revision flat. This lead to an initial 10-15 pip pop down on USDCAD, and after retracing back to pre-release
over 5-6 minutes did turn back down and slowly grind down in CAD strength about 30 pips over 45 minutes or so.
So although it seems like a good deviation we have actually been widening out our triggers on this one. Back
at the end of 2010 we were using +/-0.6 but moved to +/-0.7 during the 1st half of 2011, and since July 2011
have been using +/-0.8. Still as can be seen last month it is possible to trade a tighter deviation with a
smaller position, but you either have to take profits very quickly after the initial spike, or be prepared to
ride the trend over 30-90 minutes, which would mean that it might be safer to trade a smaller deviation as an
afterspike, because it allows you to wait and watch for confirmation that the Canadian Dollar is reacting to
the news as expected. November was a small deviation and came out at the same time as US GDP. October was
also just a small deviation. A -0.2 on Core and -0.3 Headline in September lead to a small 15 pip pop higher
in USDCAD which reversed after 2 minutes and the pair then dropped. We have to go to June for a good deviation,
but even with a full -0.6 on Core and -0.1 on Headline USDCAD really did not do much. Finally back in May, we
see a decent move of 45 pips over 6 minutes on a -0.8 deviation on Core & -0.9 on Headline. It appears that it
is important to have both Headline and Core deviate by a good amount. So you may want to set triggers on both,
or enter on Core and look for a quick confirmation on headline, not just a deviation of 0.1 or 0.2 but something
more significant like +/-0.5.
If Core is +1.0% or higher, and Headline +0.7 or higher, USD/CAD should drop 30-50 pips.
If Core is -0.6% or lower, and Headline -0.3 or lower, USD/CAD should rally 30-50 pips.
* Ticker Based Ranking according to Bloomberg
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