Various US And Canadian Reports To Be Released Friday Morning


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By Darrell Martin

Friday, November 17 at 8:30 AM, ET, Canada and the United States will release 11 different reports that will most likely have an effect on trading. For the US, the reports are based on building permits and housing starts whereas the Canadian reports deal with various aspects of the Consumer Price Index (CPI).

Building permits show the number of new permits issued by the government and are a key indicator of demand in the housing market. In order for a structure to be built, the first step is to obtain a building permit.

The housing starts report shows the strength in the housing sector by revealing the number of new residential buildings that began construction during the reported month. Both reports are forecast to have higher numbers than last month. If the number released is higher than expected, consider it positive or bullish for the USD. If it is lower than expected, then count it negative or bearish for the USD. Last month, both reports came in lower than expected.

Canadian CPI measures price changes in goods and services from the eyes of the consumer. The various CPI reports introduce variants in the report offered by eliminating some items from its survey. However, all of the reports give a key indicator for measuring inflation as well as any changes in trends regarding purchasing. The reports have levels of importance ranging from low to high.

Any higher than expected reading would be regarded positive or bullish for the CAD, with the opposite being true should the reading come in lower than expected.

Iron Condor is the strategy recommended for the news releases coming out of both Canada and the US. For the US, use Nadex EUR/USD spreads entering as early as 8:00 AM ET with an expiration of 10:00 AM ET. The minimum profit should be $30.

For the Canadian news, using Nadex USD/CAD spreads, enter an Iron Condor trade as early as 8:00 AM ET also utilizing the 10:00 AM ET expiration. Minimum profit for this trade is $30. Each spread should have a reward potential of around $15 or more.

To set up an Iron Condor, buy a lower spread and sell an upper spread, thus encircling an area in which the market will be contained. The ceiling of the lower spread must be equal to the floor of the upper spread. Iron condors are great for range bound markets and for news reports when the direction the market will go following the news is unknown.

In analyzing the logistics of an Iron Condor trade, it may seem that the risk is high and the profit is low in comparison. However, you are taking advantage of the premium, buying lower and selling higher than the market. On the buy side, if the market goes up or stays flat, max profit will be made. If the market goes up and pulls back, there is the sold contract acting as a hedge.

The spread scanner can help in setting up the trades. The image below shows USD/CAD spreads on the scanner.

After placing the trades, be sure to set stop limits to take profit. If the market makes a move in either direction, then one side can profit and should it pull back far enough, the other side can profit. If the market just ranges and at expiration is right between the two spreads, max profit is made. For every tick away the market is from the center of the two spreads at expiration, it is only $1 less in profit.

The place to put stop limit orders is at the 1:1 max risk/reward ratio points, where the market would move 60 pips up or down. That gives the market a range of 120 pips to move before you are stopped out.