Forex Signal (Mon November 15 2010, 8:30am NY Time EDT) – US Core Retail Sales m/m

We’ll be getting the Core Retail Sales (and Retail Sales) figure out of U.S. today, as high impact news releases are concerned, Retail Sales makes up about 2/3 of U.S. GDP (economy)… Here’s the forecast:

8:30am (NY Time) US Core Retail Sales Forecast 0.4% Previous 0.4%
ACTION: 1.0% SELL EURUSD / -0.2% BUY GBPUSD

USD gained momentum since last NFP release as traders begin to realize that the current USD price is undervalued, therefore a better than expected retail sales should have a higher impact than a worse than expected one. At any rate, I’d be careful in selling USD.

The Trade Plan
The plan to trade this release is straight forward. We are going to wait for 1.0% of release or better to SELL EURUSD, or a -0.2% or worse to BUY GBPUSD… If we get a in-between release, we’ll need to look at the pre-release market condition in order to make a decision, or just stay out of the market altogether.

We will trade this news release using after news retracement method, I will pay attention to both headline and core Retail Sales figures, but my focus will be on the Core figure.

For more information on my trading method:
Henry’s News Trading Methods.

The Market
The medium forecast of 67 economists surveyed by Bloomberg stated that the Core figure is at 0.4% of gain while the headline figure is expected to be around 0.7%.

With year end shopping spree approaching and better than expected employment figure plus back two months of revisions, there is definitely a chance for this release to be better than expected…

Additional Thoughts
Market could be buying USD ahead after the Sunday open consolidation from last week’s market momentum…

Overall the current market trend is pro USD, therefore I’d be very careful going against that trend.

Pre-news Consideration
I’d be looking to sell EURUSD for pre-news…

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.”

Historical Data and Chart For US Core Retail Sales

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