Weekly Top 5 Market Moves – 1/7-11/2013

The Must Watch Top 5 Events of the Week

1. US Crude Oil Inventories

01/09/2013 – Wednesday at 3:30 pm GMT

What will it affect: Oil price

Forecast: no forecast is published  at the moment but the previous number is -11.1M barrels

Where to keep an eye on the event: Bloomberg Economic Calendar

Why traders care and what to expect: Since Oil price is heavily affected by supply and demand, larger inventories would mean that supply is growing or demand is decreasing or both. When supply exceeds demand, price usually goes down. The opposite is valid for lower inventories.

Directional bias:  UP on Oil if the inventories are lower than -11.1M

                                    DOWN on Oil if the inventories are higher than -11.1M

How I would trade this event: I would buy hourly Puts if the inventories are higher than 1M barrels.

2. UK Official Bank Rate

01/10/2013 – Thursday at 12:00 pm GMT

What will it affect: GBP/USD, GBP/JPY

Forecast: no change from 0.50%

Where to keep an eye on the event: Forex Factory Calendar/Bloomberg/Reuters

Why traders care and what to expect: The interest rate is probably a country’s most important indicator concerning inflation and the overall economic health. Usually higher interest rates will strengthen the country’s currency while a decrease in the interest rate will weaken the currency. Sometimes extreme volatility can be experienced when the rate is announced, especially if a change occurs.

Directional bias: UP on GBP/USD if the interest rate is higher than 0.50%

                                  DOWN on GBP/USD if the interest rate is lower than 0.50%

How I would trade this event: I would buy 15 minute Calls if the rate will be higher than 0.50%. 

3. Euro Minimum Bid Rate

01/10/2013 – Thursday at 12:45 pm GMT

What will it affect: EUR/USD, EUR/JPY

Forecast: no change from 0.75%

Where to keep an eye on the event: Forex Factory Calendar/Bloomberg/Reuters

Why traders care and what to expect: Like I mentioned in the case of the GBP above, the interest rate is an extremely important economic indicator and it can create massive moves in the market. However, sometimes the market is more responsive to the press conference that follows.

Directional bias: UP on EUR/USD if the interest rate is higher than 0.75%

                                  DOWN on EUR/USD if the interest rate is lower than 0.75%

How I would trade this event: I would buy 15 minute Calls if the rate is higher than 0.75%.

4. European Central Bank Press Conference

 01/10/2013 – Friday at 1:30 pm GMT

What will it affect: EUR/USD, GBP/USD, EUR/JPY

Forecast: no forecast is made for this type of event

Where to keep an eye on the event: on the official website of the European Central Bank

Why traders care and what to expect: During the ECB Press Conference, President Mario Draghi makes some opening remarks regarding the conditions that determined the rate change (or why they kept it unchanged). Afterwards, he answers journalists’ questions and this can generate stronger moves than the rate itself because traders and investors try to interpret his words and attitude. Usually the Press Conference is a time of extreme volatility

Directional bias: UP if the President is hawkish in his attitude and answers

                                  DOWN if the President is dovish in his attitude and answers

How I would trade this event: I’ve had my share of bad trades during the ECB Press Conference. Often investors misinterpret Mario Draghi’s words and when they realize they are wrong, they reverse their trades, creating sharp turns in the market. I would probably wait until a clear direction is established and trade accordingly.

5. United States Trade Balance

01/11/2013 – Friday at 1:30 pm GMT

What will it affect: S&P 500, NASDAQ, DOW Jones

Forecast: -41.1B from a previous of -42.2B

Where to keep an eye on the event: Forex Factory Calendar/Bloomberg

Why traders care and what to expect: This is the difference between the exported products and services made by the US and the imported ones. If the number is positive, it means that the exports exceed the imports and the economy is thriving. However, a positive number for their trade balance has not been present for a long while so all we can expect are better numbers, but not above zero for this release.

Directional bias: UP if the number is higher than -41.1B

                                  DOWN if the value is lower than -41.1B

How I would trade this event: I would buy hourly Calls on the DOW or S&P if the numbers will be higher than -40.5B.

 Keep Tracking of the Upcoming events and discuss them with Bogdan and Friends on our Forum Here!