Monday, June 20, 2011

Canada (CA) Core Retail Sales Data m/m - 21 June 2011


Retail Sales is usually a very tradable release as traders draw direct correlation between retail activities with economic health. Here´s Forecast:

8:30am Core Retail Sales Forecast 0.5% Previous -0.1%
ACTION: USD/CAD BUY 1.0% / SELL -0.1%


The Trade Plan : I´m going to be looking for a deviation around 0.5% for this news. Since the forecast is at 0.8%, a reading of -0.1% would be negative for the CAD and we´ll be looking to BUY USD/CAD; however, if the opposite is true, or a 1.0% of actual release, I´ll be looking to SELL USD/CAD.

Let´s trade this release using my after-news retracement method. The idea is to wait for the release, then for market to spike first, and then wait for a decent retracement before getting in. 

The Market : With the current market focus on Greece and the sovereign debt situation, market will probably follow the risk averse sentiment as we open NY trading session today. With the strength of USD as both safe-haven and reserve currency, due to the ending of QE2, to be announced on Wednesday, I believe that any strong CAD news will be considered by traders as opportunity to sell on rally.

Additional Thoughts : USD/CAD is the recommended pair, if we get a strong deviation, don´t expect much retracement as this pair should move steadily and gradually until after the European market close, which is around 11:30am EST.

Pre-news Consideration : There is no pre-news trade for this release...

Definition : Our focus is on the Core Retail Sales release and not the headline Retail Sales release; Retail Sales releases from Canada is a month on month release, and basically it´s a measurement of the activities at the retail level of Canada, and the Core release is the same Retail Sales but excluding most volatile components, Automotive Components, which makes up about 25% and it varies seasonly. A better release generally means more consumer spending, which leads to better economy, thus better for its currency. And the CORE reading provides a far more accurate look of the actual economy.

Thanks,