Scheduled event risk and the considerable possibility of unforeseen risk threaten high volatility next week – unfavorable conditions for finding range trades. However, there are still a few pairs with strong technicals that could avoid next week’s FOMC rate decision and have a limited response to another wave of risk aversion should credit markets seizure again.
[B]Trading Tip –[/B] Scheduled event risk and the considerable possibility of unforeseen risk threaten high volatility next week – unfavorable conditions for finding range trades. However, there are still a few pairs with strong technicals that could avoid next week’s FOMC rate decision and have a limited response to another wave of risk aversion should credit markets seizure again. Topping the list of range candidates is EURCHF. A very notable 50% Fibonacci retracement, that has been calculated on a bull wave that has nearly spanned the entire life of the euro, sits just below spot. However, despite this major technical factor, there is still risk in trading the long side on this pair’s range. First and foremost, a long trade counters the dominate bear trend. Also concerning is the potential for a sharp rally is risk aversion that sends the franc plunging across the board. Both of these factors are buffered in our strategy by reasonable (easy to reach) targets and tight stops. To further limit risk, we will cancel any open orders by Friday or should spot hit 1.5750 before we are entered on the long trade.
[B]Event Risk Euro Zone and Switzerland[/B]
[B]Euro Zone –[/B] The most market-moving data for the Euro will come towards the end of next week, as employment and trade data provide little in the way of event risk, though the news will still be important to gauging the status of the Euro-zone economy. Meanwhile, German producer prices will be a good leading indicator for future inflation readings, and German Manufacturing PMI will signal the status of export demand from the Euro-zone. The overall Euro-zone Services PMI report, however, may draw the most attention as an indicator of consumer spending growth in the region.
[B]Switzerland –[/B] With the SNB’s rate decision out of the way, there is little in the way of major event risk for the Swiss franc. Adjusted Real Retail Sales tends to be a very volatile indicator and rarely does much to shake up Swissie, though it will be worth noting any significant shift in consumption trends. Industrial production and trade data will shed light on the global export demand situation, while producer and import prices will likely reflect hot commodity prices. However, as a low-yielding currency, traders should watch the status of risk aversion as strong bouts of flight-to-safety could lead Swissie to rally.
[B]Data for March 17 – March 24[/B]
[B]Data for March 17 – March 24[/B]
[B]Date[/B]
[B]European Economic Data[/B]
[B]Date[/B]
[B]Swiss Economic Data[/B]
Mar 17
Euro Zone Employment (4Q)
Mar 17
Adjusted Real Retail Sales (JAN)
Mar 19
Euro Zone Trade Balance (JAN)
Mar 18
Industrial Production (4Q)
Mar 20
German Producer Prices (FEB)
Mar 20
Trade Balance (FEB)
Mar 20
German PMI Manufacturing (MAR A)
Mar 20
Producer & Import Prices (FEB)
Mar 20
Euro Zone PMI Services (MAR A)