Weekly Top 5 Market Moves 17-21/12/2012
The Must Watch Top 5 Events of the Week
1. ECB President Mario Draghi testifies in front of the Committee on Economic and Monetary Affairs in Brussels
12/17/2012 – Monday at 2:30 pm GMT
What will it affect: mainly the Euro and Euro related pairs – EUR/USD
Forecast: none
Where to keep an eye on the event: Forex Factory Calendar
Why traders care and what to expect: President Draghi will speak about the Euro zone economic environment. Usually volatility is experienced during the speeches of the European Central Bank President Mario Draghi as traders and analysts try to find hints in his words about future direction. Often his words are misinterpreted and false moves can be seen.
Directional bias: UP if the President is hawkish in his speech
DOWN if the President is dovish in his speech
How I would trade this event: If the President is extremely hawkish I would buy 2 Calls with 15 min expiry and one more with an hourly expiry if my first 2 Calls expire in the money
2. United Kingdom Consumer Price Index
12/18/2012 – Tuesday at 09:30 am GMT
What will it affect: UK Stocks, UK Indices and the Pound sterling – FTSE, GBP/USD, GBP/JPY
Forecast: 2.6% from a previous of 2.7%
Where to keep an eye on the event: Forex Factory Calendar
Why traders care and what to expect: This is a leading economic indicator that shows the change in the price of services and goods purchased by the customers. The price paid by consumers has a big impact on inflation and higher prices can determine the Bank of England to raise the interest rate. Usually better than expected numbers will have a positive effect on UK’s economy.
Directional bias: UP if the numbers are better than expected
DOWN if the numbers are worse than expected
How I would trade the event: I would buy Puts for 30 minutes expiry if the numbers are much worse than 2.6% and I would buy Calls with an hourly expiry if the numbers are at least slightly better than 2.6%.
3. United States Building Permits
12/19/2012 – Wednesday at 1:30 pm GMT
What will it affect: USD related pairs and also US indices and Stocks – S&P 500, EUR/USD, USD/JPY
Forecast: unchanged from a previous of 0.87M
Where to keep an eye on the event: Forex Factory Calendar
Why traders care and what to expect: Obtaining a building permit is the first stage when building something. If more buildings are constructed, it means that the economy is experiencing a growth. Usually better than expected numbers will have a positive effect on US economy and consequently on US indices and Stocks
Directional bias: UP if the numbers are better than expected (EUR/USD is DOWN because USD is Counter currency in the pair)
DOWN if the numbers are worse than expected (EUR/USD is UP because USD is Counter currency in the pair)
How I would trade the event: Calls on S&P 500 with an hourly expiry time if the number is higher than 0.87M
4. Japan Overnight Call Rate
12/20/2021 – Early Thursday morning, during the Asian session. The exact time is not published
What will it affect: Mostly Options on JPY related pairs – USD/JPY
Forecast: unchanged from a previous of 0.10%
Where to keep an eye on the event: Forex Factory Calendar
Why traders care and what to expect: Interest rates are extremely important, probably the most important indicator available. Investors try to interpret other earlier economic indicators to get some hints about a possible rate change. Usually a higher interest rate will have a positive impact on the Japanese Yen but also on their Indices, but wild volatility can be experienced when the rate is announced and during the Press Conference that follows it.
Directional bias: DOWN if the numbers are better than expected
UP if the numbers are worse than expected
How I would trade the event: I would buy one Call on USD/JPY for 30 minute expiry if the Rate will be higher than 0.10%. I would continue to buy 15 minutes Calls until one of them expires out of the money.
5. US Core Durable Goods orders
12/21/2012 – Friday at 1:30 pm GMT
What will it affect: US Indices, Stocks and USD related pairs – DOW Jones, S&P 500, EUR/USD
Forecast: -0.1% from a previous of 1.8%
Where to keep an eye on the event: Forex Factory Calendar
Why traders care and what to expect: This economic indicator is focused on the change in the value of the total purchases made by manufacturers for goods that have a life expectancy longer than 3 years, excluding transportation related goods. Usually if the purchases have a higher volume, the production sector is experiencing growth.
Directional bias: UP if the numbers are better than expected (EUR/USD is DOWN because USD is Counter currency in the pair)
DOWN if the numbers are worse than expected (EUR/USD is UP because USD is Counter currency in the pair)
How I would trade the event: Puts on S&P 500 and DOW Jones (30 min expiry); Calls on EUR/USD (15 min expiry).
Keep Tracking of the Upcoming events and discuss them with Bogdan and Friends on our Forum Here!