Newsletter 28/09/2007

Trading Discussion News and Economy
1

ASIAN SESSION
A) CALENDAR

-27/09/2007
-GMT 23:30 JPN CPI–Tokyo (m/m), (Sep) EST 0.1% PREVIOUS 0.5%
-GMT 23:30 JPN CPI�Tokyo (y/y), (Sep) EST -0.1% PREVIOUS -0.2%
Definition
The CPI-TOKYO measures the rate of inflation experienced by consumers living in Tokyo.

-GMT 23:30 JPN CPI–Tokyo core (m/m), (Sep) EST 0.1% PREVIOUS 0.3%
-GMT 23:30 JPN CPI–Tokyo core (y/y), (Sep) EST 0.0% PREVIOUS 0.0%
Definition
This indicator is a derivative of CPI-TOKYO that excludes the volatile fresh food components of the index.

-GMT 23:30 JPN CPI–Japan (m/m), (Aug) EST 0.5% PREVIOUS -0.1%
-GMT 23:30 JPN CPI–Japan (y/y), (Aug) EST -0.2% PREVIOUS 0.0%
Definition
The consumer price index (CPI) gauges the average change in retail prices for a fixed market basket of goods and services. The CPI data is compiled from a sample of prices for food, shelter, clothing, fuel, transportation and medical services that people purchase on daily basis.

-GMT 23:30 JPN CPI-Core-Japan (m/m), (Aug) EST 0.3% PREVIOUS -0.1%
-GMT 23:30 JPN CPI-Core-Japan (y/y), (Aug) EST -0.1% PREVIOUS -0.1%
Definition
This indicator is a derivative of CPI-JAPAN that excludes the volatile fresh food components of the index.

-GMT 23:30 JPN Household spend (y/y), (Aug) EST 1.2% PREVIOUS -0.1%

-GMT 23:30 JPN Unemployment (Aug) EST 3.6% PREVIOUS 3.6%
Definition
The percentage of the people classified as unemployed as compared to the total labor force.

-GMT 23:50 JPN Retail sales (m/m), (Aug) EST 2.6% PREVIOUS -2.5%
-GMT 23:50 JPN Retail sales (y/y), (Aug) EST -0.5% PREVIOUS -2.3%
Definition
The retail sales report is a measure of the total receipts of retail stores from samples representing all sizes and kinds of business in retail trade throughout the nation. It is the most timely indicator of broad consumer spending patterns and is adjusted for normal seasonal variation, holidays, and trading-day differences. Retail sales include durable and nondurable merchandise sold, and services and excise taxes incidental to the sale of merchandise. Excluded are sales taxes collected directly from the customer. It also excludes spending for services, a large component of consumer expenditures. Retail sales is a the first picture of consumer spending for a given month. Retail sales are often viewed ex-autos, as auto sales can move sharply from month-to-month. Also, gas and food component changes are often a result of price changes rather than shifting consumer demand. Retail sales can be quite volatile and the advance reports are subject to large revisions.

-GMT 23:50 JPN Industrial production (m/m), (Aug) EST 3.1% PREVIOUS -0.4%
-GMT 23:50 JPN Industrial production (y/y), (Aug) EST 4.0 % PREVIOUS 3.2%
Definition
Industrial production consists of the total output of a nation�s plants, utilities, and mines. From a fundamental point of view, it is an important economic indicator that reflects the strength of the economy, and by extrapolation, the strength of a specific currency.

-28/09/2007
-GMT 05:00 JPN Housing starts (m/m), (Aug) EST -15.8% PREVIOUS -23.4%

-GMT 06:00 GER Retail sales (m/m), (Aug) EST 0.3% PREVIOUS 0.6%
-GMT 06:00 GER Retail sales (y/y), (Aug) EST -1.5% PREVIOUS -1.5%
Definition
The retail sales report is a measure of the total receipts of retail stores from samples representing all sizes and kinds of business in retail trade throughout the nation. It is the most timely indicator of broad consumer spending patterns and is adjusted for normal seasonal variation, holidays, and trading-day differences. Retail sales include durable and nondurable merchandise sold, and services and excise taxes incidental to the sale of merchandise. Excluded are sales taxes collected directly from the customer. It also excludes spending for services, a large component of consumer expenditures. Retail sales is a the first picture of consumer spending for a given month. Retail sales are often viewed ex-autos, as auto sales can move sharply from month-to-month. Also, gas and food component changes are often a result of price changes rather than shifting consumer demand. Retail sales can be quite volatile and the advance reports are subject to large revisions.

B) SUPPORT-RESISTANCE
EURO/USD USD/JPY GBP/USD
R3 1.4245 116.30 2.0355
R2 1.4215 116.00 2.0325
R1 1.4190 115.85 2.0310
S1 1.4135 115.35 2.0230
S2 1.4120 115.10 2.0205
S3 1.4105 114.75 2.0180

C) WATCH
-Interest Rates

  • (27/09/2007) GMT 23:30 JPN CPI�Tokyo
  • (27/09/2007) GMT 23:30 JPN CPI Core�Tokyo
  • (27/09/2007) GMT 23:30 JPN CPI-Japan
  • (27/09/2007) GMT 23:30 JPN CPI Core � Japan
  • (27/09/2007) GMT 23:30 JPN Household spending
  • (27/09/2007) GMT 23:50 JPN Retail sales
  • (27/09/2007) GMT 23:50 JPN Industrial production

D) TRADING TIPS
The most commonly used major reversal patterns are the head and shoulders, double and triple tops, the saucer, and the V, or spike. Of those the most common are the head and shoulder, and double tops and bottoms. These patterns usually signal important trend reversals in progress and are classified as major reversal patterns. There is another class of patterns, however, which are shorter term in nature and usually suggest trend consolidations rather than reversals. They are called continuation patterns.

2

US SESSION

A) CALENDAR

-GMT 12:30 USA Personal Income (m/m), (Aug) EST 0.4% PREVIOUS 0.5%
Definition
Personal income is simply the income received by individuals, nonprofit institutions, and private trust funds.
This indicator is vital for the sales sector. Without an adequate personal income and a propensity to purchase, consumer purchases of durable and nondurable goods are limited.

-GMT 12:30 USA Personal Spending (m/m), (Aug) EST 0.4% PREVIOUS 0.4%
Definition
Personal Spending, also known as PCE, represents the change in the market value of all goods and services purchased by individuals. It is the largest component of GDP.

-GMT 12:30 USA PCE Deflator (y/y), (Aug) EST % PREVIOUS 2.1%

-GMT 12:30 USA PCE Core (m/m), (Aug) EST 0.1% PREVIOUS 0.1%
-GMT 12:30 USA PCE Core (y/y), (Aug) EST 1.8% PREVIOUS 1.9%

-GMT 13:45 USA Chicago PMI (Sep) EST 53.5 PREVIOUS 53.8
Definition
The Chicago PMI (officially known as the Business Barometer) is a monthly composite index based on opinion surveys of more than 200 Chicago purchasing managers regarding the manufacturing industry. The survey responses are limited to three options: slower, faster and same. As such, the index will not capture if a component is growing but at a much slower rate or vice versa. The index is a composite of seven similarly constructed indexes including: new orders, production, supplier delivery times, backlogs, inventories, prices paid, and employment. New orders and orders backlog indices indicate future production activity. It signals
factory-sector expansion when it is above 50 and contraction when below it. The index is seasonally adjusted for the effects of variations within the year, differences due to holidays and institutional changes. Because it is an opinion survey, it is often influenced by respondents� perception of current events, as opposed to actual hard data. Also, it does not capture technological and production changes, which make it possible for production to expand, while employment contracts. Because the Chicago PMI is released the day before the ISM, it is watched in order to predict the more important ISM report, which is in itself a good leading indicator of overall economic activity. It frequently moves markets.

-GMT 14:00 USA Fed’s Lockhart Speaks on U.S. Economic Outlook in Tennessee

-GMT 14:00 USA Construct Spend (m/m), (Aug) EST -0.1% PREVIOUS -0.4%
Definition
Measures the total amount of spending in the U.S. on all types of construction. The residential construction component is useful for predicting future national new homes sales and mortgage origination volume.

-GMT 14:00 USA Michigan Sentim (Sep) EST 84.0 PREVIOUS 83.8
Definition
This survey measures the attitudes and expectations concerning both present and future economic conditions of 500 consumers. Just like Consumer Confidence, the
level of consumer sentiment is directly related to the strength of consumer spending. It is almost identical, with two subindexes - expectations and current conditions, but
has two monthly releases, a preliminary and final reading. The consumer expectations portion of the Michigan survey is a component of the leading economic indicators
index. Consumer spending accounts for two-thirds of the economy, so the markets follow any indicator relating to consumer behavior and attitudes. The more confident consumers are about the economy and their own personal finances, the more likely they are to spend. It is interesting to note that changes in consumer sentiment and retail sales don’t move in tandem.

-GMT 14:15 USA Fed’s Yellen Speaks at Federal Reserve Bank of Boston

-GMT 17:00 USA Fed’s Poole Speaks on Central Banking at Princeton Club in NY

-GMT 17:15 USA Fed’s Mishkin Speaks at Chicago Banking Conference

B) SUPPORT-RESISTANCE
EURO/USD USD/JPY GBP/USD
R3 1.4245 116.30 2.0380
R2 1.4215 116.00 2.0355
R1 1.4190 115.85 2.0325
S1 1.4155 115.20 2.0225
S2 1.4140 114.90 2.0195
S3 1.4120 114.75 2.0180

C) WATCH
-Interest Rates
-GMT 12:30 USA Personal Spending
-GMT 12:30 USA PCE Core
-GMT 13:45 USA Chicago PMI
-GMT 14:00 USA Michigan Sentim

D) TRADING TIPS
The most commonly used major reversal patterns are the head and shoulders, double and triple tops, the saucer, and the V, or spike. Of those the most common are the head and shoulder, and double tops and bottoms. These patterns usually signal important trend reversals in progress and are classified as major reversal patterns. There is another class of patterns, however, which are shorter term in nature and usually suggest trend consolidations rather than reversals. They are called continuation patterns.