Written by Barry Battista
Monday, November 22nd, 2010
7:00 AM EST
CAD CPI m/m – Change in price of goods and services, excluding the most volatile items
USD/CAD
There are 3 rows of data with this thing, and they don’t always agree. In August, it came out at -.2, -.1, and -.2. The spike was 20 pips, but there was quick retracement afterwards. In September, it came out at -.1 and 0 (I didn’t note the 3rd row). The spike was 0 pips. In October, we had -.1, .1, and -.1, with a small spike of 14 pips and much subsequent thrashing. The spread on the USD/CAD frequently grows to about 10 pips or more right before the CPI. I will trade the Oracle Trader on row 1 only with a .2 medium and .3 safe. Go very conservatively on the medium lots, and no more than 1/2 your normal lots on a safe. You are probably better off to not trade the Straddle on this as too often we don’t get a large enough spike to make it worth while.
8:30 AM EST
CAD Core Retail Sales - Change in the total value of sales at the retail level, excluding automobiles.
EUR/CAD
This is a better trade than the last one. It has 2 rows of data. In August, it came out at -.6 and -.3, and spiked 21 pips. This was too small of a spike for that deviation, but it had moved up for many hours before the news came out, so some clearly anticipated the direction in advance. If you notice this, or you hear Dustin say it in the trade room, you should lower your lots immediately. This is true for ANY trade we do. In September, we had a deviation of -.8 and -.7, with a spike of 41 pips. In October, we had a mess. The data was -.1 and .6, so we had disagreement in the rows. It spiked up 15 pips on the row 1 data, and then down 35 pips on the row 2 data. So this can be dangerous if we get disagreement, which is not common but does happen. I will use OT triggers of .5 medium and .7 safe on row 1, with light lots on the medium, and 3/4 lots on the safe. Don’t worry if row 2 comes out first. Hold out for row 1. If row 1 comes out first and gets you in, be quick to close if row 2 comes out with a big deviation in disagreement. This is unlikely, however. I will trade the Straddle on this also, using a maxspread of 7. If it grows to 10, as the EUR/CAD is prone to doing, I will be glad to not be in.
8:30 AM EST
USD – GDP q/q Prelim – change in the value of goods and services produced by the economy.
EUR/JPY or USD/CHF
The GDP from last month (called Advanced for the USD) is better than this one but this will be good also if it hits out triggers. Remember, this Prelim GDP is quarterly. In May this came out at -.4 (didn’t note row 2), spiked 30 pips, and continued downward for awhile after the release. In August it came out at .2 and .1, and spiked 21 pips. Row 2 came out a full second earlier and most of the spike was due to that. I will trade both rows 1 and 2 on this, using a medium of .6 and a safe of .8 on the OT. If it hits these triggers, we should see a good 40 pip spike minimum. I will trade the Straddle as well, using the USD/CHF pair with a maxspread of 6. This will resemble craziness because of the CAD release coming out at the same time. If you can only trade one of the two 8:30 releases, I would go with the CAD because it is more likely to hit our triggers. But if this hits, it will be a big trade.
10:00 AM EST
USD – Existing Home Sales
EUR/JPY or USD/CHF
This is a cool down trade after the excitement of the 8:30 trades. The last time I traded it was in August. I used triggers of .5 and .8 for medium and safe, and it came out at -.82 and spiked 19 pips. I have traded the New Homes Sales the last 2 months but that trade seems to have fallen from grace, and this one appears to be doing a bit better now. I would recommend raising my old triggers to .8 and 1.2 on row 1, and trading lightly. Not worth doing a Straddle on this one. Maybe if we see some bigger spikes out of it, we can be more aggressive.
