Forex Minute Trade Plan – Fundamental Insights 23/04/2014

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As the markets return to normality after the Easter break, a number of key fundamental releases look set to dominate sentiment. Here’s what you need to know.

Canadian Core Retail Sales

The morning’s headline release is Statistics Canada’s latest retail sales report. The data, represented as a percentage figure, measures the change in the total value of retail sales in Canada. The core figure, the focus of this section, excludes vehicles from its calculation in an attempt to reduce the volatility of the data. The bad winter weather in Canada has led consensus to forecast a decline on the previous figure, with small growth of 0.6% expected versus a previous release of 1.0%. Look for an upside surprise to boost the value of the Canadian dollar, with an intraday downside target in the USDCAD of Tuesday support at 1.1002. Conversely, expect a data miss to weaken the Canadian dollar, with an initial upside target in the pair of intraday resistance at 1.1046.

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US New Home Sales

The afternoon’s headline release is the latest new home sales data out of the US. The headline figure measures the annualised change in the number of new homes sold during March. The US economy is very much in the spotlight at present, with investors looking to key data releases such as this one to gain insight into the potential for monetary policy tightening, and in turn, a timeline of its execution.

A high number of new home sales suggests a strong economy, not just because it reflects consumer optimism, but also because of the ripple effect new home sales creates. Every new home sold effects the construction industry and the retail sectors associated with new homes such as furniture and fittings. For this reason, a higher than expected figure will generally strengthen the USD versus its major counterparts, while a lower than expected figure will generally do the reverse.

Consensus forecasts the headline release at 450K, so look for an upside surprise to to offer up an initial intraday downside EURUSD target of weekly lows at 1.3784. A miss on the other hand, would validate intraday highs at 1.3853 as an initial upside target.

To contact the reporter of this story: Samuel Rae at Samuel@forexminute.com