Forex Trading Signals by Magister Pips, 2012/02/21
0830 CAD Retail Sales Less Autos MoM (Core) (+0.1% expected, +0.3% prior, -0.2% to +0.5% range)
Affliated Reports:
CAD Retail Sales m/m (-0.1% expected, +0.3% prior, -0.4% to +0.7% estimate range)
Last month Core deviated +0.1 but with a revision to the previous month of -0.1, and actually Headline
was exactly the same deviations. This was not a deviation we would even consider, but there was about
a 10 pip whipsaw, and price eventual resolved about 10-15 pips higher on the USDCAD...which basically
shows bearishness, despite the higher deviations to the month being reported. In December there was
+0.5 deviations on both again, 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. 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 +0.9% or higher, and Headline +0.4 or higher, USD/CAD should drop 30-50 pips.
If Core is -0.7% or lower, and Headline -0.5 or lower, USD/CAD should rally 30-50 pips.
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