FOREX NEWS SIGNAL

NEWS TRADING

Wednesday October 14, 2009

[8:30am NY Time]

US Core Retail Sales BUY 1.0% SELL -0.3% USD/JPY

We have both retail sales (healine and core, also know as ex auto)
coming out at 8:30am, It is important to make sure there is no
conflict with the numbers between the them in order for us to get
into a trade. Usually the Core release is more accurate reflection
of the activities at the retail level because it excludes the
volatile Automotive components, which could be influenced by the
recent governmental incentives, or just seasonal factors; therefore
the headline Retail Sales should be different from the Core reading,
and hopefully in the same direction. As the Headline number is
expected at -2.0% (E), with a previous release of 2.7%. Our focus
will be not so much to vast difference of the estimated releases of
these numbers, but the deviation from their respective estimate to
the actual release figures.

As we could probably expect the market to react based on risk
sentiment, therefore I may have to focus on other pairs such as the
EUR/JPY or GBP/JPY for best results, using USD/JPY as a gauge.
(USD/JPY up for risk appetite and USD/JPU down for risk aversion)

DEFINITION:

"(Retail Sales Core) Derivative of Retail Sales that excludes the
Automobile Sales component. Automobile Sales make up roughly 25% of
Retail Sales, but they can be very volatile from month to month and
can distort the picture. Retail Sales with the exclusion of this
volatile component is thought to be a better indicator of the
underlying trend in consumer spending."

[5:45pm NY Time]

NZ CPI q/q BUY 1.1% SELL 0.5% NZD/USD

Our focus will be on the headline CPI number. If we get a better
than expected number of 0.8% by 0.3%, we should be looking to BUY
NZD/USD; if we get a lower than 0.5%, then we'll see NZD/USD move
down.

With recent RBA (Reserve Bank of Australia) unexpected rate hike,
RBNZ (Reserve Bank of New Zealand) is widely expected to hike
interest rates next, as both economies are closely correlated. As
this release will undoubtedly push that speculation to a new level
since it would give RBNZ Governor Bollard justification to hike
rates. However, if the 3rd quarter CPI turned out to be less than
expectation, we could see a possible switch of sentiment on RBNZ
hiking rates in the next few meetings, thus add more downward
pressure to the NZD than this release would normally do. In other
words, expect a more exggerated response from the market... and to top
it off, this release is scheduled at the unholy hours of U.S.
evening prior to NIKKEI open, therefore expect to see low liquidity
along with this release.

DEFINITION:

"The Consumer Price Index (CPI) measures the rate of inflation
(i.e., the rate of price changes) experienced by consumers when
purchasing goods and services. A rising trend has a positive effect
on the nation's currency. The primary objective of the central bank
is to achieve price stability; when inflation rises above an
annualized rate of approximately 2%, they will respond by raising
interest rates to bring prices down. Higher interest rates attract
foreign investment, thus increasing demand for the nation's
currency. CPI is one of the most closely watched indicators and will
usually have a high impact upon release."

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