Case Study: Reaction to UK Retail Sales

MPC's minutes on Wednesday helped sterling to appreciate against major currencies when it showed that there was a vote for an increase in interest rate. It also showed that they want to have more data before any decision on changing the rate and it was when Retail Sales and GDP were ahead.

Retail sales in UK dropped the most in decades, -3.9 percent, and sterling depreciate in response. But I think the opportunity was missed well before the data:

• The best time for selling pound might be probably at the midnight of Central Europe, when technical data were increasingly showing divergence (e.g. RSI divergence and MACD crossover in GBPJPY chart).


• And before the release, some weak economic reports from euro-zone such as German IFO and Euro PMI in addition to this fact that more concerning data are ahead from US housing markets were a trigger to the market to buy back the Yen as reducing carry trading.

30 pip profit even without oil

I closed the position, taking 30 pip profit in 8 hours, well before releasing Euro data. There is much room for Euro to depreciate today but the risk has started to rise technically and I don't want to bear it. Oil price reached 136.55 in Asian markets, near Friday's high, seems ignoring Jeddah summit. (the trade plan)

Jeddah Summit, Euro PMI, German IFO; Betting on the limits

Some OPEC members showed willingness for limiting oil price, at least in their words, which could work in the short term, and selling oil is usually dollar positive. This Monday might is not a promising day for Euro when Purchasing Manager Index for France, Germany, and Euro-zone, in addition to German IFO Business Climate all are expected to show weakness in euro area. Anybody who wants to buy Euro may find it at a cheaper price in the next 10 hours.

So, I decided to sell EURUSD at 1.5634, when technical data looks relatively supportive.