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Pairs to Range Trade

AUDUSD Calendar to Help Create Range Entry Point

Mon, May 12 2008, 06:03 GMT
by Ilya Spivak

FXCM

With the US reporting on highly vulnerable sectors of the fundamental landscape and all Australian data out of the way early in the week, it looks likely that we will see just enough bad Aussie news to push AUDUSD to support for a long entry before the dollar bear comes back.

Trading Tip – Today’s erratic market environment is not conducive to a range-bound approach. Conservative traders that are intent on following a range-bound approach should be mindful of this when evaluating these trade ideas. We will look to limit risk by removing any unfilled orders by the end of the trading week or should spot hit 0.9500.

Event Risk for Australia and the United States

Australia – Following today’s profound drop in Business Confidence, the last substantial release on the Australian calendar will be May’s Consumer Confidence reading on Tuesday. The tone of this release is likely to be bleak as well as the economy grapples with record-high interest rates at 7.25%. This will be followed up on the same day by the Wage Cost Index for the first quarter. The tight conditions in the labor market have put upward pressure on wages, which in turn bids up overall inflation. The RBA has made a trade-off in stalling to ease rates to squeeze out inflationary pressure, but to date it seems only the growth part of this scenario is playing out as prices remain high. This release may therefore carry more weight than usual, as it particularly pertinent to the direction of near-term monetary policy.

US –The week’s event risk begins with Tuesday’s release of April Retail Sales figures. Following the drop in imports seen in last Friday’s Trade Balance release, this metric is likely to amount to more dire news about the reluctance of the American consumer. Wednesday’s headline CPI will surely be distorted by energy and food prices, with traders likely to focus on the core reading. It was an uptick in this metric that saw the Fed hint at a pause in rate cuts at the last meeting of the FOMC. Thursday’s Philadelphia Fed survey will be closely watched as it will offer one of the first pieces of data covering May. The dollar rebounded towards the end of April, and this release will offer a timely look at how the ISM survey may lean in the coming weeks.

Published on  Mon, May 12 2008, 09:19 GMT

Archive

• Fibs Contain USDHKD In a Well-Defined Range
  Published On Fri, Jul 18 2008, 05:57 GMT
• EURCHF Ranging Ahead of a Busy European Calendar
  Published On Wed, Jul 16 2008, 06:48 GMT
• US Dollar To Remain Ranging Versus New Zealand Counterpart
  Published On Mon, Jul 7 2008, 05:57 GMT
• Dollar to Remain Range-Bound Against the Franc
  Published On Tue, Jul 1 2008, 11:45 GMT
• Canadian Dollar Sets Up to Offer Range Trade Against Euro
  Published On Wed, Jun 25 2008, 06:52 GMT

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