Risk Events: German PMI and UK Retail Sales

German Manufacturing PMI and UK Retail Sales will be the key news announcements coming out on Thursday, August 21, 2014.

AnnouncementTime (GMT)ForecastPrevious
German Manufacturing PMI7:30 AM51.852.4
UK Retail Sales (MoM)8:30 AM0.4%0.1%

German PMI

UK Retail Sales (MoM)

UK Retail Sales (YoY)

German Manufacturing PMI peaked early 2014 at 56.5 before declining to levels just above 52. With Thursday’s announcement looming ahead, if forecasts are realized, we will see a weakening in the indicator with a possibility of future figures breaking below 50. This will provide a bearish outlook on the German economy if figures continue to decrease.

Though MoM UK Retail Sales is widely observed, this figure gets revised every month doesn’t provide Thursday’s announcement much validity. On top of that the indicator ranges between 2% and -2% which means that revisions can provide a big impact on various price corrections on financial securities. Either way, the announcement should provide opportunities to trade off of. Looking at historicals, we see that in 2014 the YoY figures have risen significantly while maintaining levels above 3% and this means retail sales have notably improved since 2013.

Conclusions…

Both German Manufacturing PMI and UK Retail Sales announcements will provide trading opportunities which can become profitable if employed in the right way. In terms of what we should be looking for is where the figures will lie compared to forecasts. If German PMI breaks below 52 we should see a weakening in the Euro and with strong UK Retail Sales figures look for a strengthening Pound. Major pairs to trade would be the EURUSD, GBPUSD, and the EURGBP. Look to test support levels on the EURUSD (and EURGBP depending on how announcements will be realized) and resistance levels on the GBPUSD.