FOREX NEWs SIGNAL OCTOBER 2009

NEWS TRADING

Thursday October 8, 2009

[7:00am NY Time]

UK BOE Rate Decision N/A

BOE's MPC is scheduled to release interest rate decision today, and
it's expected that Bank of England will keep the current rate at
0.50% (again). If you remember last rate decision, BOE kept both
interest rate and APF unchanged, which turned out to be a bullish
signal for the sterling.

One interesting observation is the MPC meeting minutes of the last
rate decision meeting, which came out at an unanimous vote count of
keeping both rate and APF unchanged. Seems like the dissenters have
decided on a wait and see policy. This is of course, a rather
bullish signal for the Sterling.

Today's rate decision will once again hinged upon the APF program.
If BOE were to increase it once again, it would surprise the market
and we could see immediate Sterling weakness. However, on an
unchanged verdict, market may not necessarily take that as a
positive sign. Therefore, regardless of the rate decision, we could
see some weakness in the Sterling prior to the release.

As usual, I'll be trading this news live and post the results back
here. If everything is as expected, we could see very little market
reaction, and therefore it could be a no trade.

[7:45am NY Time]

ECB Rate Decision N/A

ECB (European Central Bank) will most likely leave rates at an
unchanged level of 1.00% once again. It is almost impossible for
ECB to surprise the market at this point and cut or hike current
rate by 0.25%. Numerous of ECB officials, including chairman
Trichet, stated recently that the current rate is appropriate, the
expectation for ECB rates among analysts is pretty much neutral.

Furthermore ECB is still concerned over the imbalanced economic
recovery over its member countries, therefore there would be no
justification for a rate hike, even though RBA surprised the market
by hiking rates, ECB is not likely to follow suit.

And of course, based on past track records, ECB is not in the habit
of surprising the market, therefore not much market reactions
usually follow this release.

The important event will be the press conference at 8:30am, or 45
minutes after this release. ECB Chairman Trichet will deliver a
written statement and then host a lengthy Q&A session. Market is
more likely to be extreme volatile during the press conference than
the actual rate decision, as Trichet sometimes may drop hints on
future ECB monetary policy direction; therefore, I'd pretty much
skip this news and just pay attention to the press conference itself
as usual.

[8:30am NY Time]

Trichet Press Conference

Trichet will once again deliver a statement along with a Long and
boring Q&A session afterwards. This press conference is usually
very volatile and the market is always listening to Trichet's tone
for future ECB policies. If Trichet is hawkish, then we will see
EURO gain, if Trichet is dovish, then we will see EURO lose against
all other currencies.

Fair Warning: If you have never traded this release, it is better to
stay out of the market. Wait until around 9:30am~10:00am NY Equity
open, then follow the trend. If Trichet is hawkish or being
optimistic, then EUR/USD will gain throughout the session and may
even carry over to Friday. Therefore there are plenty of
opportunities to trade after the market has already established
itself.

This Press Conference is usually done in 2 parts, the first part is
a written statement which various newswire services will release
headlines immediately at 8:30am, then Trichet will read through the
statement; 2nd part of the press conference is a Question and Answer
session where Trichet will take questions live from onsite media
members. This part is highly unpredictable as Trichet may hint the
market and drive prices intentionally. As I once heard from someone
who knows Trichet personally, that there is never a slip-of-tongue
with Trichet, he does everything intentionally.

However, Trichet is pretty good in maintaining a neutral stance, but
sometimes market may read too much into his statements and move
excessively... so once again, if you have not traded this release
before, best to stay out.
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