CA IVEY PMI Forex Analysis Forecast: August 7, 2012

The Canada IVEY PMI will be released today. This release is considered a leading indicator that receives much attention from traders; especially when its released early in the week before the Employment report. Here’s the forecast:

10:00am (NY Time) CA IVEY PMI Forecast 51.7 Previous 49.0
DEVIATION: 3.0 (BUY CAD 55.0 / SELL CAD 49.0)

The Trade Plan
Our tradable deviation factor is around 3.0. IVEY PMI is usually tradable when its released before the Canadian Employment Change report. The IVEY PMI is a leading indicator used to predict future trends. The Employment Change is a lagging indicator that is usually two months behind. Therefore, the IVEY PMI report should indicate which direction the employment report will go in the future…

We’ll look to BUY CAD if we get 55.0 or more. We’ll look to SELL CAD if we get 49.0 or less. I’ll be using Retracement Trading method. To find out more about my trading system, read:

I’d recommend to use the Recommended Pairs from above as they are based on my CSM, which should provide the best combination of currency pairs to trade based on better/worse news… of course, you can also trade the default pair: USD/CAD.

Outlook Score
Outlook score is derived from market sentiment, focus, and economic indicators for the currency. It represents the long-term trend of the currency and its market perception. In short, a strong Outlook Score means more long-term demand for the currency, and a weak Outlook Score is the opposite.

DEFINITION
The Ivey Purchasing Manager’s Index (PMI) measures the activity level of purchasing managers from all sectors of the economy, 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.