2014-04-03 00:30 GMT (or 02:30 MQ MT5 time) | [AUD - Trade Balance]
if actual > forecast = good for currency (for AUD in our case)
Australia Has A$1.20 Billion Trade Surplus
Australia posted a seasonally adjusted merchandise trade surplus of
A$1.20 billion February, the Australian Bureau of Statistics said on
Thursday - down 14 percent on month.
That topped forecasts for a
surplus of A$850 million following the downwardly revised surplus of
A$1.392 billion in January (originally A$1.433 billion).
Exports were roughly flat on month at A$29.970 billion, up from A$29.76 billion in the previous month.
Non-rural goods added A$420 million (2 percent). Net exports of goods under merchanting remained steady at A$15 million.
goods fell A$157 million (4 percent) and non-monetary gold fell A$133
million (10 percent). Services credits fell A$10 million.
Imports added 1.0 percent to A$28.770 billion, up from A$28.33 billion a month earlier.
Capital goods climbed A$791 million (15 percent) and non-monetary gold surged A$109 million (43 percent).
and other merchandise goods fell A$531 million (5 percent) and
consumption goods fell A$58 million (1 percent). Services debits added
Also on Thursday, the ABS said that the total value
of retail sales in Australia was up a seasonally adjusted 0.2 percent on
month in February, coming in at A$22.972 billion.
That missed forecasts for an increase of 0.3 percent following the 1.2 percent jump in January.
2014-04-03 01:45 GMT (or 03:45 MQ MT5 time) | [CNY - HSBC Service PMI]
if actual > forecast = good for currency (for CNY in our case)
China Services PMI Rises To 51.9 In March
The service sector in China expanded at a faster pace in March, the
latest PMI from HSBC and Markit Economics revealed on Thursday, coming
in with a four-month high score of 51.9.
That's up from 51.0 in
February, and it moves farther above the boom-or-bust line of 50 that
separates expansion from contraction.
The employment sub-index
moved higher for the first time in five months, the data showed, while
input costs declined at manufacturers but gained at service providers.
Manufacturers' new orders fell at the strongest rate in 28 months.
fell for the second month in a row at manufacturers, albeit marginally.
Backlogs of work also decreased slightly at service sector firms. Input
costs faced by Chinese manufacturers fell at the sharpest rate since
"The HSBC China Services PMI suggests a modest
improvement of business activities in March, with employment expanding
at a faster pace. However, combined with the weaker manufacturing PMI
reading, the underlying strength of the economy
is softening, which should ultimately weigh on the labor market," said
Hongbin Qu, HSBC Chief Economist, China & Co-Head of Asian Economic
Trading the News: European Central Bank Interest Rate Decision (adapted from dailyfx article)
According to a Bloomberg News survey, 54 of the 57 economists polled see
the European Central Bank (ECB) sticking to the sidelines in April, but
the market speculation (rate cut, negative deposit rates, verbal
intervention, unsterilized bond purchases, Long-Term Refinancing
Operation) surrounding the interest rate decision may spark increased
volatility in the EUR/USD as market participants weigh the outlook for
What’s Expected:Why Is This Event Important:
The EUR/USD may push higher over the remainder of the week should the
ECB merely reiterate the policy statement from the March 6 meeting, but
the single currency may continue to give back the rally from earlier
this year should central bank President Mario Draghi lay the groundwork
to implement more non-standard measures across the monetary union.
Indeed, the heightening risk for deflation may put increased pressure on
the ECB to further embark on its easing cycle, and the EUR may face a
larger decline in the coming days should the central bank take
additional steps to shore up the ailing economy.
However, President Mario Draghi may retain a rather neutral tone for
monetary policy amid the positive developments coming out of the
euro-area, and the EURUSD may continue to carve a series of higher highs
& higher lows as the central bank remains reluctant to move away
from its current policy.
How To Trade This Event Risk
Trading the ECB interest rate decision may not be as clear cut as some
of our other trade setups as the press conference with President Draghi
ends with a Q&A session
Bearish EUR Trade: ECB Implements More Easing/Draghi Adopts Dovish Tone
Potential Price Targets For The Rate Decision
European Central Bank (ECB) March 2014 Interest Rate DecisionEURUSD M5 : 46 pips price range movement by EUR - Interest Rate news event :
2014-04-03 11:45 GMT (or 13:45 MQ MT5 time) | [EUR - Interest Rate]
if actual > forecast = good for currency (for EUR in our case)
ECB Stays Pat Despite Deflation Worries
The European Central Bank maintained status quo on Thursday, despite
rising fears of deflation in the euro area, as more data suggest the
region's economic recovery remains on track.
meeting in Frankfurt, the Governing Council decided to maintain the main
refinancing rate unchanged at a record low 0.25 percent for the fifth
month in a row. The decision was in line with economists' expectations.
marginal lending facility rate was kept at 0.75 percent and the deposit
facility rate at zero, where it has remained since July 2012.
previous change in interest rates was in last November, when the bank
unexpectedly cut the refi rate and the marginal lending rate by a
ECB President Mario Draghi is set to hold the
post-meeting press conference at 8.30 am ET, when he is expected to
detail the central bank's assessment of the current economic situation
in the euro area.
"The ECB's best policy option is verbal
intervention and not new tangible action," ING Bank Senior Economist
Carsten Brzeski said.
"We see the ECB stepping up its dovish
language by aligning its next moves with changes in the inflation
outlook over the next few months."
2014-04-03 12:30 GMT (or 14:30 MQ MT5 time) | [USD - Trade Balance]
if actual > forecast = good for currency (for USD in our case)
U.S. Trade Deficit Unexpectedly Widens To $42.3 Billion In February
Amid an increase in imports and a drop in exports, the U.S. trade
deficit unexpectedly widened in the month of February, according to a
report released by the Commerce Department on Thursday.
The Commerce Department said the trade deficit widened to $42.3 billion in February from a revised $39.3 billion in January.
had been expecting the trade deficit to narrow to $38.5 billion from
the $39.1 billion originally reported for the previous month.
unexpectedly wider deficit was partly due to a notable drop in the value
of exports, which fell 1.1 percent to $190.4 billion in February from
$192.5 billion in January.
With the decrease, which largely
reflected a steep drop in exports of industrial supplies, the value of
exports hit its lowest level since last September.
On the other
hand, the report showed that the value of imports rose by 0.4 percent to
$232.7 billion in February from $231.7 billion in January.
in royalties and license fees, including payments for the rights to
broadcast the Winter Olympics, contributed to the increase in the value
Paul Ashworth, Chief U.S. Economist at Capital Economics, said,
"Overall, we suspect that the unusually cold weather may have limited
exports of industrial supplies, meaning that we could see a bounce back
"That data won't be available until after the initial
estimate of first-quarter GDP growth is released, however, suggesting
that the latter [will] now come in under 2% annualized, although it
might subsequently be revised a little higher," he added.
Commerce Department noted that the goods deficit widened to $61.7
billion in February from $59.5 billion in January, while the services
surplus narrowed to $19.4 billion from $20.2 billion.
the report also showed that the U.S. trade deficit with China narrowed
to $20.9 billion in February from $27.8 billion in the previous month.
to the same month a year ago, the trade deficit for February was
narrower by almost $1 billion. Exports were up by 1.9 percent
year-over-year, while imports rose by 1.1 percent.
Discovering the Forex Holy Grail
This is a title that is hard to read or write without smiling.
The “holy grail” is the mother of all Forex jokes and cynical
constructions. Yet it exists, is staring us all in the face, but is
widely ignored, because the psychological stresses of working with the
grail are paradoxically greater than most people can cope with.
The best way this can be explained is to imagine taking a handful of
salt grains and throwing them up in the air. Suppose you were then able
to measure the distance of each grain of salt from the throwing point.
You would find that most of them would be relatively close to you, with
a few outliers that had travelled further away. If you make a graph
showing the distribution of the results, the graph would look like a
bell curve, which is a typical and “normal” distribution:
The bottom axis shows the distance travelled by each grain of salt. The
percentages show how many grains travelled each given distance.
Now suppose that you were constantly buying and selling randomly in
the Forex market, and you measured and recorded the maximum possible
gain of each trade over thousands of trades and thousands of days. If
you constructed a version of the above graph with those results and
superimposed it upon the earlier graph, the result would look something
like this, with the dotted lines representing the market’s returns
So, it can be established that speculative markets such as the Forex
market produce more excessive returns, both positive and negative, than
can be expected from a “normal” returns distributions model. A greater
number of excessive price events happen than would normally be produced
by simple randomness. In plain language, the market offers more big
winners and losers than it really should.
Here is the holy grail: the use of tight stop losses will remove the
excessive losing events, and the use of wide take profit targets will
allow the “fat tail” of excessively positive returns to be captured.
Yes, it can be this simple, although it is not without a few potential
In order to illustrate exactly how the fat tail phenomenon can be
exploited, let’s examine some back test data run on Gold and the major
Yen crosses from 2011 to 2013 over a period of 3 years. These were the
most volatile and trending instruments in the Forex markets during most
of this period. If a very simple trading strategy of entering upon the
next bar break of any engulfing bar on the H4 chart in the direction of
the engulf was followed, using a stop loss placed just the other side
of the engulfing candle, the following results would have been achieved
by instrument and reward to risk profit targets:
Notice how a very simple, straightforward strategy that takes no
account whatsoever of trend, direction and support and resistance can be
made into a positive expectancy of 53 cents gain for every dollar
risk, simply by not taking profit until reward has reached 50 times
It would be simple to improve these results by moving stop losses to
break even after a certain period of time on every trade. This is
because the strongest winners usually will only retest the entry, if at
all, relatively quickly.
Even the Holy Grail has Pitfalls
The holy grail exists, but it has to be handled with caution. You can
find the grail by trading the right instruments that move with maximum
volatility, i.e. those markets that are most attractive to speculation,
and using simple entry strategies to ensure you participate in the
market’s excessive movements in the direction of your trade. You do not
have to be right or forecast the major moves: you just have to be
there, cut your losers short, and let your winners run. The natural
tendency of the market to produce fat tails will do your work for you.
There are two major pitfalls that this might lead you to. The first
is that you will be better served by a more intelligent exit strategy
than simply aiming for a fixed reward to risk multiple. You need to be
booking wins above 10 R:R, ideally towards 25 R:R or even beyond, but
each trade will be different. Look to exit around those levels but use
some intelligence and discretion. Also, being prepared to move stops to
break even when the trade is a certain distance or time in profit
The second major pitfall lies in the fact that this type of strategy
will always produce very low win rates, where you will lose as much as
over 90% of your trades. This will inevitably cause very large losing
streaks which will severely test both your mental strength and your
money management strategy. The grail gives gold, but it is hot to touch
and burns the unwary! Do you have what it takes to sit through twenty
or more losing trades in a row? Do you have a money management strategy
that will properly protect you from ruin should you begin with a long
losing streak? Will you be diversified and uncorrelated enough in order
to keep losing streak risk to a minimum?
One final danger is worth a mention. It is natural to try to filter
entries. However it is very problematic to distinguish entries that are
likely to reach a ratio of 25:1. Furthermore, missing just one of these
winners will set back your overall expectancy, unless the method used
will also filter out at least 25 losing trades at the same time.
These are some questions to ponder and investigate. Spend some time
back testing. The holy grail has been placed in your hands!
Euro Plunges as Policy Makers Announce “Unconventional Measures” to Increase Inflation (based on forexminute article)
The euro plunged today after the European Central Bank hinted that it
will resort to unconventional measures to combat the low inflation in
the eurozone, and maintained the interest rates.
The 18-nation currency fell to $1.3736 as ECB President Mario Draghi
briefed reporters, before plunging even further to $1.3711 shortly
after. The currency was last trading 0.4 percent lower against the
greenback at $1.3716; and went down 0.14 percent and 0.25 percent lower
against the British pound and the Japanese yen respectively.
"The (ECB's) Governing Council is unanimous in its commitment to using
also unconventional instruments within its mandate in order to cope
effectively with risks of a too prolonged period of low inflation,"
Draghi told reporters.
Inflation in the economic bloc was 0.5 percent in March, its lowest so
far since the 2009 global economic recession. It is also in the sixth
month of what Draghi terms as the “danger zone” of under 1 percent.
"The ECB is being slightly more dovish than the market expected," Kathy
Lien, the New York-based head of BK Asset Management told Reuters. "The main takeaway is that the council is considering unusual techniques, and that's negative for euro/dollar."
The U.S. dollar index was up at 80.418 in early trade in New York. The
U.S. currency went higher against the yen at 103.95 yen after earlier
reaching a peak of 104.06, the highest since January 23.
So far, the dollar has advanced roughly 3 percent versus the yen after
U.S. Federal Reserve Chair Janet Yellen disclosed that the Fed may
increase borrowing costs this spring. Tomorrow’s data on job statistics
may determine the direction the dollar will further head.
Draghi Says ECB Does Not Exclude Further Policy Easing
European Central Bank President Mario Draghi on Thursday vowed swift
action against risks of a prolonged period of low inflation in the euro
area and downside risks to the region's growth.
"We will monitor developments very closely and will consider all
instruments available to us," Draghi said in his introductory statement
in the customary post-meeting press conference in Frankfurt.
"We are resolute in our determination to maintain a high degree of monetary accommodation and to act swiftly if required."
The central bank left the main refi rate unchanged at a record low 0.25
percent for a fifth month running, earlier today. The marginal lending
facility rate was retained at 0.75 percent, while the deposit rate was
kept at zero.
"We do not exclude further monetary policy easing and we firmly
reiterate that we continue to expect the key ECB interest rates to
remain at present or lower levels for an extended period of time,"
Draghi said. He cited the overall subdued outlook for inflation, given
the broad-based weakness of the economy, the high degree of unutilised
capacity and subdued money and credit creation as reasons behind the
"The Governing Council is unanimous in its commitment to using also
unconventional instruments within its mandate in order to cope
effectively with risks of a too prolonged period of low inflation,"
The moderate recovery in euro area is proceeding as expected and the
inflation trajectory is consistent with its assessment of a prolonged
period of low inflation, followed by a gradual upward movement in HICP
inflation rates, the ECB said. Inflation expectations remain anchored to
ECB's price stability target of 'below, but close to 2 percent', the
Responding to questions from reporters, Draghi said the bank has not
exhausted its pool of conventional tools and its forward guidance has
been successful. Policymakers discussed lower interest rates and
narrowing of the rate corridor today, he said.
The Governing Council also considered unconventional measures such as
quantitative easing and negative deposit rate, during the discussion,
which Draghi described was "ample and rich".
There is no risk of deflation in euro area as of now, he repeated,
adding that his biggest fear is a protracted stagnation of economic
recovery. Further, he said the longer inflation remains low, the higher
will be the risk for long-term inflation expectations.
Draghi's dovish comments caused the euro to promptly drop against the
U.S. dollar. While euro exchange rate is very important for price
stability, it is not a policy target, he reiterated, adding that
policymakers are closely monitoring geopolitical risks and exchange-rate
Consumer price inflation eased to a more than four-year low of 0.5
percent in March, which Draghi said was a 'genuine surprise' for the ECB
and producer prices declined the most since late 2009.
He also said policymakers will study the March figures more closely, as
it was distorted partly by the effect of Easter holidays falling in
April this year, while they were in March in 2013.
The ECB expects inflation to pick up in April. He also acknowledged that
ECB underestimated energy prices due to profound changes taking place
in the energy market.
The International Monetary Fund upped the pressure on the ECB to act
with IMF Managing Director Christine Lagarde, in a speech on Wednesday,
warning of an emerging risk of "low-flation", particularly in the euro
While welcoming the IMF's 'generous' suggestions, Draghi asserted that the Governing Council's viewpoints were different.
Elsewhere today, the Paris-based Organisation for Economic Cooperation
and Development said in a report that Eurozone monetary policy should
remain accommodative for an extended period of time as inflation rates
are substantially below the ECB's objective and output below its
"Risks of deflation or a protracted period of very low inflation remain
as the large degree of economic slack has put persistent downward
pressure on inflation, which is well below the ECB's quantitative
definition of price stability," the think tank said.
"If substantial uncertainties were to re-emerge, or if deflationary
risks intensify, additional non-conventional measures should be
The US Dollar advanced for a fifth consecutive day against the Japanese
Yen having launched higher as expected after carving out a Triangle
chart pattern. Prices are now testing resistance at 104.11, the 00.0%
Trading the News: U.S. Non-Farm Payrolls (adapted from dailyfx article)
The U.S. Non-Farm Payrolls (NFP) report may in still a bullish outlook
for the dollar (bearish EUR/USD) as employment is expected to increase
another 200K in March, while the jobless rate is anticipated to narrow
to an annualized 6.6% from 6.7%.
Why Is This Event Important:
Indeed, a material pickup in job growth may put increased pressure on the Federal Open Market Committee (FOMC)
to normalize monetary policy sooner rather than later, but the reserve
currency may struggle to hold its ground should the NFP report dampen
the outlook for growth and inflation.
The resilience in private sector consumption along with the ongoing
decline in planned job cuts may generate a positive employment report,
and a large uptick in job growth may highlight an improved forecast for
the USD as the Fed continues to see a stronger recovery in 2014.
Nevertheless, the persistent slack in the real economy paired with the
downtick in business confidence may drag on NFPs, and a dismal print may
trigger a sharp selloff in the greenback as it weighs on interest rate
How To Trade This Event Risk
Bullish USD Trade: NFP Climb 200K+; Unemployment Slips to 6.6%
U.S. Non-Farm Payrolls (NFP) February 2014 :