Weekly Top 5 Market Moves 1/14-18/2013
The Must Watch Top 5 Events of the Week
1. Fed Chairman Ben Bernanke speaks
01/14/2013 – Monday at 9:00 pm GMT
What will it affect: S&P 500, DOW JONES Industrial Average
Forecast: no forecast is made for this type of event
Where to keep an eye on the event: Bloomberg, CNBC, other financial websites
Why traders care and what to expect: The Fed Chairman will deliver a speech at the University of Michigan, in Ann Arbor and he will talk about always important matters like monetary policy and economic projections. Speeches of heads of central banks have a massive impact on the markets, the most recent example being the huge EUR/USD move when Mario Draghi spoke last week.
Directional bias: UP if the Fed Chairman is hawkish in his attitude and answers
DOWN if the Fed Chairman is dovish in his attitude and answers
How I would trade this event: I would probably wait until the direction is clear. However, if Ben Bernanke is clearly biased towards one type of attitude (hawkish or dovish), I would trade accordingly; Puts on US indices if he is clearly dovish and Calls if he is clearly hawkish. Interpreting his words is can be difficult and I would recommend patience before trading.
2. UK Consumer Price Index (CPI)
01/15/2013 – Tuesday at 09:30 am GMT
What will it affect: GBP/USD, GBP/JPY
Forecast: no change from 2.7%
Where to keep an eye on the event: Forex Factory Calendar
Why traders care and what to expect: Consumer prices are in direct correlation with the inflation levels: higher prices paid by consumers can lead to higher inflation values. If the inflation increases excessively, the Central Bank could decide to raise the interest rate. The CPI is probably UK’s most important inflationary gauge.
Directional bias: UP on GBP/USD if the value is higher than 2.7%
DOWN on GBP/USD if the value is lower than 2.7%
How I would trade this event: I would buy 15 minute Calls in sequence until I lose one if the CPI value will be higher than 3.0% and just one Put if it will be lower than 2.0%.
3. US Core Retail Sales
01/15/2013 – Tuesday at 1:30 pm GMT
What will it affect: EUR/USD, GBP/USD
Forecast: 0.2% from a previous of 0.0%
Where to keep an eye on the event: Forex Factory Calendar/Bloomberg/Reuters
Why traders care and what to expect: The retail sector is a major part of any country’s economy. The Core Retail Sales is an economic indicator that measures the change in value of retail sales without taking into consideration automobile sales. About 20% of all sales made at a retail level are represented by automobile sales but they are considered to be too volatile and tend to alter the overall data; that’s why the Core data is considered to be more accurate.
Directional bias: UP on EUR/USD if the value is lower than 0.2%
DOWN on EUR/USD if the value is higher than 0.2%
How I would trade this event: The USD is counter currency in the EUR/USD pair so I would buy Calls if the value will be lower than 0.0% and Puts if the value will be higher than 0.5%.
4. US Producer Price Index (PPI)
01/15/2013 – Tuesday at 1:30 pm GMT
What will it affect: DOW JONES Industrial Average, S&P 500, NASDAQ
Forecast: -0.1% from a previous of -0.8%
Where to keep an eye on the event: Forex Factory Calendar/Bloomberg/Reuters
Why traders care and what to expect: The indicator measures the change in the price of goods sold by producers and it is highly correlated with the CPI because if producers increase prices, the consumers will ultimately have to pay more for an item. A decreasing PPI can be indicative of a slowing down economy.
Directional bias: UP if the numbers will be higher than -0.1%
DOWN if the numbers will be lower than -0.1%
How I would trade this event: Hourly Call on Dow Jones if the value is higher than 0.5% and Hourly Put if the value is lower than -0.8%
5. US Prelim UoM Consumer Confidence
01/18/2013 – Friday at 2:55 pm GMT
What will it affect: S&P 500, NASDAQ, DOW JONES
Forecast: 75.1 from a previous of 72.9
Where to keep an eye on the event: Forex Factory Calendar/Bloomberg/DailyFX
Why traders care and what to expect: It is considered one of the most important indicators of consumer sentiment and it forecasts to some extent the level of consumer spending. After all, if consumers are confident in the economic conditions, they are likely to spend more in the near future.
Directional bias: UP if the number is higher than 75.1
DOWN if the number is lower than 75.1
How I would trade this event: I would buy hourly Calls on the DOW or S&P if the numbers will be higher than 80 and Puts if the numbers will be lower than 70.
Keep Tracking of the Upcoming events and discuss them with Bogdan and Friends on our Forum Here!