NEWS TRADING..MONDAY FOR FOREX

NEWS TRADING
Monday February 1, 2010
[4:30am NY Time]
UK Manufacturing PMI         BUY 56.1    SELL 52.1     GBP/USD
Our focus for today will be on the Manufacturing PMI number from UK
and it's forecasted at 52.0; UK PMI's medium point is 50, therefore
this forecast is considered as a positive release (above the 50
level means expansion in the manufacturing sector).
We are looking for a tradable deviation of 2.0, and because this is
a leading indicator and its impact may affect the future trend of
this currency for the remainder of the week or even for the month of
February, market should react to this release with volatility should
we get out deviation.  We can expect GBP/USD to move 50 pips within
the hour if you deviation is hit.
Due to the risk adverse sentiment in the market and the general
strength of USD, I'd use extreme caution on the better than expected
release as GBP is still expected to depreciate against the USD in
the medium term... Take the context of the market into your trading
consideration.
DEFINITION:
"UK Manufacturing PMI is a survey of purchasing managers in the
manufacturing sector on various economic activities, including
inventory, employment, orders, etc... A higher than 50 reading means
expansion, or a less than 50 reading means contraction."
[10:00am NY Time]
US ISM Manufacturing PMI       BUY 58.0   SELL 53.0      USD/JPY
Our focus today is to trade the ISM Manufacturing PMI during the New
York Trading session, and our tradable deviation for a safe trade is
2.5 points either way.  In the event we get a better than expected
release, this could once again fuel the recent bullish rally of USD;
however, if the release is negative, below or close to the medium 50
level, we could see some correction in the recent rally of the
greenback...  Since this is a leading indicator, investors pay more
attention to this release for signs of market direction this month
and possibly trend change.
However, with the market still just starting this year, we'll have
to pay more attention to the premarket sentiment before jumping into
a trade.  In the grand scheme of things, this release shouldn't
really affect the long-term trend of the USD should we get a
negative release, but in the case of a positive release, expect to
see further downward moves in EUR/USD and GBP/USD.
DEFINITION
"The Institute of Supply Management (ISM) Manufacturing Index
measures the activity level of purchasing managers in the
Manufacturing sector, with a reading above 50 indicating expansion.
A rising trend has a positive effect on the nation's currency. To
produce the index, purchasing managers are surveyed on a number of
subjects including employment, production, new orders, supplier
deliveries, and inventories. Traders watch these surveys closely
because purchasing managers, by virtue of their jobs, have early
access to data about their company's performance, which can be a
leading indicator of overall economic performance."
[10:30pm NY Time]
RBA Rate Decision          BUY 4.25%      SELL 3.75%    AUD/USD
Reserve Bank of Australia  (RBA) is going to hike its official cash
rate once again to 4.00% as it is widely expected by the majority
economists surveyed by both Bloomberg and Reuters.  Majority of
economists expected a pause in today's rate decision back in
December of 2009, and many of them had apparently jumped ship and
are now on the side of a rate hike... As a matter of fact, there are
rumors floating of a possible hike of 1/2 percent instead of the 1/4
percent forecasted...
Before we also jump on the bandwagon, remember the situation today
is no longer sunny skies with no clouds... It's more a foggy day with
low visibility, and all traders should use caution...  On one hand RBA
is facing real inflationary pressure; but on the other hand, recent
equity market losses are unnerving...   Should RBA decide to wait and
see, we could expect AUD to drop significantly against other
currencies, especially against USD.
RBA will also release a statement along with the rate decision. 
I'll be watch closely and should there be any hint of a possible
pause, we should SELL AUD/USD immediately.