Forex Trading Signals by Magister Pips, 2012/02/08
1645 NZ Unemployment Rate (+6.5% expected, +6.6% prior, +6.2% to +6.6% range)
Affliated Reports:
NZ Employment Change (QoQ) (+0.4% expected, 0.2% prior, 0.0% to +1.0% range)
NZ Employment Change (YoY) (+1.9% expected, +1.1% prior, +1.1% to +2.5% range)
Another release from New Zealand that only comes our way once a quarter. Last release was in
November and came out with a +0.2 on the Unemployment Rate (higher Rate is bad) and also a -0.4%
deviation lower (lower Change is bad) on the Quarterly Change figure with a +0.1 Revision to the
previous figure. The Yearly figure was also lower by -0.5% below the Median Estimate. Basically
all 3 data points were worse and the NZDUSD blasted down about 45-50 pips in the 1st minute. It
then just flat-lined for about 50 minutes, before it again started to tumble heading into the Tokyo
Open, moving down another 60 pips. It bounced a bit heading in to Europe where it was bought. The
move on the news can be a bit of a concern for the very short term spike traders, as it all came in
the 1st minute and then just went sidewise for quite awhile. Certainly if one is trading highly
leveraged they will not feel too comfortable holding the trade for nearly an hour waiting for further
lows to be attained. Those trading more reasonable sized positions looking to hold for a swing trade
based on the bad news would have done well, even if they didn't get filled on the initial spike.
Therefore spike traders need to be careful about slippage and delayed execution if they don't want to
get stuck with a bad fill holding more than they feel comfortable with. There was no deviation in
August and May was had a -0.1 on the Rate and caused quick 35 pip spike which drifted back to pre-
release, this came with a +0.8 on the QoQ Change. This is why it best to trade based on the Rate, as
what seems to be a large deviation on Change is not making the move continue. Set the deviation on the
Rate, then check that the Change figures agree. In Feb 2011 a +0.3 on Rate came with -0.7 on Change
caused a 60 pip spike but the move appears to have started before the release, a possible leak. The
lows were retested but not broken. This contrasts to a -0.3% deviation in October 2010 with a +0.5%
deviation on the QoQ Change where the move went 80-90 pips. We have been suggesting trading +/-0.3%
triggers on Rate, but saying more aggressive traders could use +/-0.2%, and for good reason in that
last month all the move came in the intial blast, however further lows were eventually seen. Best
to still spike trade with +/-0.3% triggers, but watch +/-0.2% triggers for an afterspike or Post-
Release swing trade....if of course the Change figures agree. Watch out for an pre-news move heading
into the release. Careful for the triple roll-over 15 minutes after the release.
If Rate 6.2% or lower, and Employment Change is +0.4 or higher, NZD/USD should rally 40-75 pips
initially, and 50-80 over 15-45 minutes.
If Rate 6.8% or higher, and Employment Change is -0.4 or lower, NZD/USD should drop 40-75 pips
initially, and 50-80 over 15-45 minutes.
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