Tuesday, August 2, 2011

Australia Retail Sales Data Release - August 2, 2011

We´ll be getting the Retail Sales figure from Australia today once again, and if you´ve been following news out of Australia, you´d know that Retail Sales has been a sticky point for Aussie economy and a strong improvement may change the short term trend for the currency. Here´s the forecast:
 
9:30pm NY Time AU Retail Sales 

Forecast 0.4% Previous -0.6%

ACTION: AUD/USD BUY 0.9% SELL -0.1%

The Trade Plan

The deviation that we are looking for the Australian Retail Sales m/m release is for a minimum of 0.5%. If we get a 0.9% (or better) we´ll look to buy and if we get -0.1% (or worse), we´d look to SELL. There is a high probability of market movement of over 50 pips in the next 2 hours if we get our deviation.

We´ll be looking for an after-news retracement trade and we´ll do the 3 W´s. Wait for the deviation, Wait for the market to move with momentum first, and Wait for a decent retracement. 
The Market

Australian Retail Sales is expected to expand by 0.4% today.  With low Unemployment Rate and being one of the most sought after currencies out of the majors, today’s Retail Sales could come slightly better than expected… However, recent CPI reading has shown that disposable incomes are being squeezed out by persistent inflationary pressures, and with the appreciation of the AUD at a much slower pace during the month of June, Retail Sales could be slightly worse than expected…  Therefore, there should be no pre-news trading for this release as it is quite unpredictable.

Additional Thoughts

AUDUSD is a very slow moving currency pair. If the release hits our deviation, we may have to jump in sooner than later... We could see very little retracement, if any, if we get a huge surprise in the market. It is also important to consider the low liquidity market condition as well.

Pre-news Consideration

There is no pre-news sentiment for this release.

DEFINITION

"Measures the value of sales at the retail level. A rising trend has a positive effect on the nation´s currency because Retail Sales make up a large portion of consumer spending, which is a major driver of the economy and has a sizable impact on GDP. Traders payclose attention to Retail Sales because it is usually the first significant indicator of the month that relates to consumer behavior and is susceptible to surprises."

Thanks,