Germany Industrial Production - Data Leak leads to sell off before the release

Today on Thursday April 5th 2012, the Industrial Production figures for Germany were released. The data came out at 11:00 GMT (6:00 EST). This blog entry is included as it shows what is sometimes refered to as "Buy the rumor, sell the news", but often it can be "Sell the leak, buy the news"....and either it shows how good the research departments at the major banks are, or that indeed the information is getting leaked from the Department of Statistics from some underpaid secretary or janitor. Also it does show that the estimates provided to Bloomberg which are used to compose the 'Median Estimate' can also be skewed to provide the wrong forward projection for the release, when elsewhere it is known to be different. Whatever it is, we have no proof other than the proof of the price chart.

Here is the data:

Germany Industrial Production MoM (sa)
Estimates- Median: -0.5% Average: -0.4% Low: -1.9% High: +1.3%
Actual: -1.3% Prior: +1.6% Revised: +1.2%

Germany Industrial Production YoY (nsa wda)
Estimates- Median: +0.5% Average: +0.5% Low: -1.8% High: +2.3%
Actual: -1.0% Prior: +1.8% Revised: +1.5%

As we can see it was much lower. Now from the start of the European session it was very natural to sell EURUSD from its Central pivot point at 1.3160...it soon moved down to the big round number of 1.3100, and quite naturally took out stops there and moved down further into the 1.3080-95 region. However then the further extension from there down to 1.3060 in the 15 minutes leading into the release of the German data was highly suspect and points to early release amoungst an elite few. The data came out and there was no further price reaction, indeed the EURUSD had sold off all it could by that time, and a period of slow profit taking commenced which moved the pair back into the 1.3080 zone.

Here is the chart, the red mark is where the data was released:

German IFO - Rumor of higher number leads to rally, prints higher

This morning of February 23rd at 9:00 GMT (4:00 EST) the IFO figures were released from Germany. There was a rumor of a better number during the early European open and this lead the Euro to gain during the morning leading into the release. There were Middle-Eastern names seen buying the Euro but also some barrier protection at 1.3300 the round figure. The number was indeed higher, but not really by that much, this one is good to trade on a deviation of about +/- 1.2 and we didn't get that much higher than the median analsyst estimates. So this could have been a buy-the-rumour/sell-the-news setup, but actually price managed to continue on up even after the release, despite all the movement before the news. Alot of bidders and once the barrier option broke then further upside was attaing. However 1.3350 the mid-handle was frontrun, barrier protection again perhaps?, or just market-makers protecting the next hedging level....interesting anyhow. Anyhow we had resistance marked from 1.3340-50 so rode it down to 1.3270 as New York opened.

Here is the data:

German IFO - Business Climate
Estimates- Median: +108.8 Average: +109.0 Range: +108.0 to +111.0
Actual: +109.6 Prior: +108.3 No Revision

German IFO - Current Assessment
Estimates- Median: +116.5 Average: +116.5 Range: +115.0 to +118.0
Actual: +117.5 Prior: +116.3 No Revision

German IFO - Expectations
Estimates- Median: +102.0 Average: +102.0 Range: +100.4 to +104.5
Actual: +102.3 Prior: +100.9 No Revision

Here is the 1 minute chart of EURUSD:

and here is the 1 minute chart of EURJPY

UK Retail Sales - Much Higher good spike higher into resistance

This morning of February 17th at 9:30 GMT (4:30 EST) the monthly Retail Sales figures were released from the UK. They were much higher than expected by a good amount and there was a nice rally.

Here is the data:


UK Retail Sales Ex Auto Fuel(MoM)
Estimates- Median: -0.3% Average: -0.4% Range: -0.9% to 0.0%
Actual: +1.2% Prior: +0.6% No Revision

UK Retail Sales Ex Auto Fuel(YoY)
Estimates- Median: -0.1% Average: 0.0% Range: -0.6% to +0.6%
Actual: +1.9% Prior: +1.7% Revised: +1.4%

UK Retail Sales w/Auto Fuel(MoM)
Estimates- Median: -0.3% Average: -0.3% Range: -0.9% to +1.1%
Actual: +0.9% Prior: +0.6% No Revision

UK Retail Sales w/Auto Fuel(YoY)
Estimates- Median: +0.5% Average: +0.5% Range: 0.0% to +1.9%
Actual: +2.0% Prior: +2.6% Revised: +2.5%

US NonFarm Payroll - Much Higher Risk-On except for European Currencies and Gold

This Friday, February 3rd 2012 at 8:30 EST (13:30 GMT) the montly payroll data from the USA was released. This is basically an indication of the Employment Situation and is the most well known and widely watched piece of economic data known to the market. Almost every market instrument will move based on this data. If there are jobs in the USA then there will be confidence and Americans will have money in the pockets to buy stuff...whether houses from the large stock available or things fabricated in China.

Earlier in the week on Wednesday the ADP data came out slightly lower. This is a smaller sample but it gives an advanced indication of what is likely to happen with the NonFarm Payroll Number.
There are other economic data figures which attempt to gauge the employment situation in the USA. The weekly Initial Jobless Claims for instance has been coming out below 400k since December 2011. This broke the low seen in February 2011 and the number has been consistently at around 360k now. The Challenger Job Cuts was higher however, which indicates more people were laid-off from their jobs. The Employment Component of ISM Manufacturing PMI was also slightly lower, but Consumer Confidence definately has been up. Anyhow despite all these advanced readings on the day there is little you can do to predict what the NonFarm Payroll number will be unless you have special connections or something. This time there was an upward surprise. Here is the data:

US Change in Nonfarm Payrolls
Estimates- Median: +140k Average: +146k Range: +95k to +225k
Actual: +243k Prior: +200k Revised: +203k

US Change in Private Payrolls
Estimates- Median: +160k Average: +162k Range: +110k to +250k
Actual: +257k Prior: +212k Revised: +220k

US Change in Manufacturing Payrolls
Estimates- Median: +12k Average: +14k Range: +9k to +25k
Actual: +50k Prior: +23k Revised: +32k

Unemployment Rates
Estimates- Median: +8.5% Average: +8.5% Range: +8.3% to +8.7%
Actual: +8.3% Prior: +8.5% No Revision

Average Hourly Earning MOM All Emp
Estimates- Median: +0.2% Average: +0.2% Range: 0.0% to +0.3%
Actual: +0.2% Prior: +0.2% Revised: +0.1%

Average Hourly Earning YOY All Emp
Estimates- Median: +1.9% Average: +1.9% Range: +1.8% to +2.0%
Actual: +1.9% Prior: +2.1% No Revision

Average Weekly Hours All Employees
Estimates- Median: 34.4 Average: 34.4 Range: 34.3 to 34.5
Actual: 34.5 Prior: 34.4 Revised: 34.5

Change in Household Employment w/Pop
Actual: 847 Prior: 176 No Revision

Underemployment Rate
Actual: 15.1% Prior: 15.2% No Revision

So where to start. Of course there were some nice moves, however while the commodity currencies forex pairs rallied the european currencies sold off. Gold sold off while Crude rallied. We will start with the Stock Index Futures, these are actually the most reliable to trade on US news in general these days. Here is the 1 minute chart of the Emini S&P 500 Future and the DAX Future:

After the Stock Index futures the CADJPY or another Commodity Currency like Australian dollar or New Zealand versus the Japanese Yen, AUDJPY or NZDJPY. Here is the 10 second chart of the CADJPY:

and this is the 1 minute chart of the CADJPY to show more of the move:

It is always good to keep an eye on the USDJPY, although the moves are not always so many pips. Here is the 10 second chart of the USDJPY:

and a 1 minute chart of the USDJPY to show more of the move:

So now a 30 second chart of the EURUSD will show how it moved down on the release. It did briefly run up about 30 pips but then dropped 120 pips:

In contrast to the AUDUSD which spiked up, pulled back, and kepted rallying. The GBPUSD, USDCHF, USDNOK followed the Euro by weakening against the Dollar, only the Swedish Krona escaped the sell-off in European Currencies. The NZDUSD, USDCAD, USDZAR and Asian Currencies all rallied against the US Dollar much like this Australian Dollar did in this 1 minute chart of AUDUSD:

Also here is the 1 minute chart of Gold. It was whippy initially, basically it lost some of its shine as a safe-haven when better employment in the USA meant risk appetite. Interesting to note shifting correlations, Crude Oil did rally in contrast:

Canadian Employment lower - leads to moderate upmove

This Friday morning of February 3rd at 12:00 GMT (7:00 EST) the Employment figures where released from Canada. Basically this used to be the best news to trade, even better than the most well known Non-Farm Payroll news. However when big variations in Full time and Part time Employment were taken into account, the Canadian Dollar forex pairs stopped reacting so well to just the Employment Net Change deviation.

Recently the Australian Employment Change figures have come with analsyt estimates for Full Time and Part Time Employment Change, this has not yet happened for the Canadian Numbers, so we have to compare this months number to the prior number. So although there was a quite significant deviation lower on the Net Employment Change figure from Canada today of -19.7, as well as a 0.1 deviation on Unemployment Rate the USDCAD did not move that much higher. In the past a deviation of this sort would move the pair at least 50-60 pips easily, if not 80. When we look at the Full Time Employment Change we see that this number improved, so the drop which caused the deviation in the Net Employment Change number came from Part Time Employment.

Here the figures:

Canada Net Change in Employment
Estimates- Median: 7.5% Average: 7.5% Range: 7.4% to 7.5%
Actual: 7.6% Prior: 7.5% No Revision

Canada Unemployment Rate
Estimates- Median: +22.0k Average: +22.2k Range: +5.0k to +45.0k
Actual: +2.3k Prior: +17.5k No Revision

Canada Full Time Employment Change
Actual: -3.6k Prior: -25.5k No Revision

Canada Part Time Employment Change
Actual: +5.9k Prior: +43.9k No Revision

Canada Participation Rate
Estimates- Median: 66.6 Average: 66.6 Range: 66.6 to 66.6
Actual: 66.7 Prior: 66.6 No Revision

Here is a 10 second chart of the USDCAD forex pair. Very modest spike for such a economic news deviation:

This is a 30 second chart of the CADJPY pair:

Next is the 1 minute chart of the pair. Over the next 90 minutes the USDCAD did go on to make another high at 1.0030, making a total of about 30 pips on the move. However with Non-Farm Payrolls out at 8:30 EST (13:30 GMT) this move up got quickly erased. The Red Arrow is the Canadian Employment Change Release and the Green Arrow is the US Non-Farm Payroll Release:

This 2 minute chart shows how the USDCAD came off its lows during the European session and moved up about 40 pips ahead of the econonmic new release:

This 3 minute chart shows the move for the whole day, leading into the Canadian Employment Data then into the US Non-Farm Payroll to finish the week:

This 1 minute chart shows the CADJPY move thru the Canadian Employment into the US Non-Farm Payroll:

UK Services PMI - Good Deviation higher but delayed spike

This Friday morning of February 3rd 2012 at 9:28 GMT (4:28 EST) the Services PMI figures were released out of the UK. This figure is a forward looking indicator for the UK economy because it measures the Purchasing Manager Index, and if the companies are buying more that usually means that they expect to sell more to the customers. Anyway these figures were quite bad in Q4 2011 getting quite close to the 50 level. The 50 level is key because below it signifies contraction and anything above it is considered growth. The PMI is for the Services sector which is the largest sector in the UK and so is quite important. There were prints below 50 in PMI for manufacturing last year but Services just managed to avoid it.

Last year this was probably the best economic news indicator to trade. It is quite simple for news trading as there is only 1 number and its revision, unlike other news which comes with Core and Headline, Month-on-Month, Year-on-year and so on. However in the past 3-4 releases there has been a move heading into the release, then despite what in the past have been good sized deviations capable of moving the British Pound pairs alot of pips has just seen a small 10-15 spike extension of the pre-news move, followed by a complete reversal below the pre-release price. This is dangerous as it can trap any traders who may have had some slippage or experience delay in getting their orders filled by their brokers. The pre-news move is often difficult to distinguish because it occurs in tandem with moves in other key major pairs such as the EURUSD, so whether it is a rumor or leak of a bullish UK data release or just general risk appetite or aversion is not distinguisable. Just when it nearly became reliable enough to fade the spike reversal on this number, today there was a tiny whipsaw but a few minute later the GBPUSD pair did rally. It is important to remember that although the news comes out at 28 minutes past the hour, some do not see the data until half past. This actually is when the pair did start to rally. It was a good sized positive deviation so it did do what it was suppose to do even with the move up heading into the release.

Here the figures:
UK PMI Services
Estimates- Average: 53.3 Average: 53.3 Range: 52.0 to 55.0
Actual: 56.0 Prior: 54.0 No Revision

First the 30 second chart of the GBPUSD pair, the release is marked with the red arrow:

next is the 5 minute chart which shows the run up in the GBPUSD heading into the news. The pair had another move higher and then started to top out. There was the US Non-Farm Payrole later in the day, so it was unlikely for the markets to move alot one way or the other before this:

Also here is the 30 second chart of the GBPJPY, it also moved up after 2 minutes like the GBPUSD:

For total coverage 30 second charts for GBPCHF, GBPAUD, GBPCAD, GBPNZD and EURGBP. Some moved with the news trading deviation, others did not so well. Spreads on some of these pairs can be a problem. Some have less liquidity than the major pairs, however some have less 'attention' which can help depending on your trading platform.