USDJPY Headed Back to 111?

USDJPY Headed Back to 111?

Chart Of The Day

USDJPY Headed Back to 111?

There was very little movement in currencies on Monday and this lack of volatility could be indicative of trading for the rest of the week. With no major U.S. economic reports scheduled for release and Fed Chair Janet Yellen not speaking again until after the markets close on Friday, political headlines are the only hope for volatility in the greenback. Traders should be watching for any news on the selection of a Fed chair, North Korea and any progress or setbacks on tax reform. Yellen, who has a 90% chance of losing her job in February spoke on Sunday and her comments were relatively hawkish. She said employment should bounce back after weak September and her best guess is that soft inflation readings won’t persist. Most importantly, she felt ongoing economic strength warranted gradual rate hikes, which suggests they are on track to raise interest rates one more time this year. These positive comments along with the stronger than expected Empire State manufacturing survey helped USD/JPY avoid further losses as manufacturing activity in the NY region grew at its strongest pace in more than 3 years. However looking ahead we believe USD/JPY is vulnerable to additional losses as U.S. and South Korea military exercises begin. A Fed chair announcement is also expected any day now and anyone but Yellen would be perceived as dollar negative and anyone but Powell or Warsh (the 2 leading contenders) could send USD/JPY below 111.00.

Technically while USD/JPY has bounced off the 200-day SMA, its finding resistance at the 20day SMA on the 4 hour charts. The weekly charts also show major resistance between the 50-week SMA at 112.14 and the 50% Fib retracement of the 2015-2016 decline near 112.60. If USD/JPY breaks the 200-day SMA at 111.75, the next stop should be 111.10.

Economic Data Calls for 10/17/17

Weekly Calendar Calls

Here’s what we are looking for in tomorrow’s economic reports (Oct 17, 2017) — Good Luck Trading!

1. NZ CPI (17:45 NY Time) -- Bearish NZD -- Potential for downside surprise given Much weaker food & commodity prices

2. UK CPI, RPI, PPI and House Price Index (4:30 NY Time) -- Bullish GBP -- Potential for upside surprise given Service and manufacturing sectors report stronger price pressures. Smaller decline in shop prices

3. EZ CPI and GE ZEW Survey (5:00 NY Time) -- Bearish EUR -- Potential for downside surprise given Investor sentiment may be slightly weaker given Spain’s troubles and prospect of ECB moves

4. US Industrial and Manufacturing Production (9:15 NY Time) -- Bullish USD -- Potential for upside surprise given Stronger ISM manufacturing

Today’s Trades 10.16.2017 – EURUSD, EURGBP, CADCHF, AUDCHF

Swing

*Good morning/afternoon everyone!*

We are starting the week with a mixed U.S. dollar that is trading higher against EUR, AUD, CAD and CHF but lower versus the GBP, JPY and NZD. Although we have the Empire State manufacturing survey scheduled for release today, it is a week devoid of any major market moving U.S. economic reports. Instead, Fed speak and geopolitical risks will be key and that’s why USD/JPY is struggling to rise because the uneven U.S. recovery, NK risks and the selection of a Fed chair hang over the currency. The worst performing currency this morning is the Canadian dollar, which has bounced off the 20/50 SMA cross to trade back above 1.25. The euro is under pressure due to Catalonia uncertainty but GBP is powering higher anticipation of positive economic reports this week. We don’t expect an exceptionally volatile NY trading session but we may see continuation on the latest moves.

*The MAIN THEMES I see today are*

-EUR
+GBP
-CAD
+CHF
+CAD

*Trading Biases*

-EUR, -AUD, -NZD
+GBP, +CHF, +CAD, +JPY
mildly +USD,

*Today’s Ideas*

1. Sell AUDCHF at .7675, Stop at .7705. Target .7655
2. Sell EURGBP at .8872, Stop at .8902, Target .8852
3. Sell EURUSD at 1.1802, Stop at 1.1832. Target 1.1782
4. Sell CADCHF at .7782, Stop at .7812, Target .7762

Cancel ALL pending orders by 3:30PM NY / 19:30 GMT / 5:30AM AEST
Close ALL open day trades by 4PM NY / 20 GMT / 6AM AEST

EUR/GBP – Still Headed for 88 Cents

Chart Of The Day

eurgbp101317
With the wild swings in EUR/USD came big moves for EUR/GBP on Friday but when the dust settled, sterling outperformed the euro and we think this move will last. The European Central Bank’s monetary policy announcement is less than 2 weeks away. Between now and then, the only thing that investors will be thinking about is whether it will be a hawkish or dovish taper. Based on last week’s mostly better than expected economic reports, the ECB should reduce asset purchases and pave the way for tighter policy. However between Spain’s political troubles (which are no closer to being resolved) and the high level of the exchange rate, ECB officials have stressed that policy will remain extremely accommodative which suggests that their preference for a dovish taper. The longer the market feels that way, the greater the pressure on the euro. In contrast, sterling was this past week’s best performing currency. Now that Prime Minister May’s troubles seem to be fading and the EU’s Chief Negotiator suggested that they could provide the 2 year Brexit transition that she’s been asking for, a soft Brexit and prospects of a year end rate hike have returned to take sterling higher. Next week is an important one for the U.K. because there are a number of key economic reports on the calendar that will play a major role in hardening or weakening the BoE’s case for tightening. Inflation, employment and consumer spending numbers are scheduled for release and we are mostly looking for stronger data that should drive GBP even higher.

On a technical basis, after breaking below the 100-day SMA, EUR/GBP spent the last 24 hours trading firmly below this key support turned resistance level. We now believe that the pair will fall to at least 0.8850, the 20-day SMA and more likely to the first standard deviation Bollinger Band at 0.8800.

Today’s Trades 10.13.2017 – EURUSD, EURNZD, EURGBP, CADCHF

Swing

*Good morning/afternoon everyone!*

The most important pieces of U.S. data this week are scheduled for release today and the steady to slightly weaker performance for the dollar suggests that investors are worried that retail sales and CPI will not live up to lofty expectations. Or they believe that even if these numbers are strong, it will not alter the odds of a December rate hike which is still nearly 2 months away. With that in mind, U.S. yields are pointing higher before the reports so we still expect a run-up in the greenback ahead of the 8:30am numbers. Meanwhile short covering continues to drive the AUD and NZD as these currencies shrug off mixed Chinese trade data. Sterling has extended its gains while the euro lags behind. The loonie is quiet but should tick up as well.

*The MAIN THEMES I see today are*

-EUR
+GBP
+AUD
+NZD
+CAD

*Trading Biases*

-EUR, -CHF
+GBP, +AUD, +NZD, +CAD
mildly +USD, -JPY

*Today’s Ideas*

1. Sell EURGBP a .8893, Stop at .8923, Target .8873
2. Sell EURUSD at 1.1821, Stop at 1.1851, Target 1.1801
3. Sell EURNZD at 1.6546, Stop at 1.6576, Target 1.6526
4. Buy CADCHF at .7824, Stop at .7794, Target .7854

Cancel ALL pending orders by 3:30PM NY / 19:30 GMT / 5:30AM AEST
Close ALL open day trades by 4PM NY / 20 GMT / 6AM AEST

Economic Data Calls for 10/13/17

Weekly Calendar Calls

Here’s what we are looking for in tomorrow’s economic reports (Oct 13, 2017) — Good Luck Trading!

1. US CPI and Advance Retail Sales (8:30 NY Time) Bullish USD -- Potential for upside surprise given rise in CPI

2. US U. of Mich Sentiment Report (10:00 NY Time) Bearish USD -- Potential for downside surprise given drop in IBD/TIPP Economic Confidence data

Today’s Trades 10.12.2017 – NZDUSD, NZDJPY, USDCAD

Swing

*Good morning/afternoon everyone!*

There is very little consistency in the performance of currencies this morning with the European currencies under pressure, the commodity currencies trading strongly and the U.S. dollar mixed as a result. Yesterday’s FOMC minutes were perceived as less hawkish but the odds of a December rate hike did not change, explaining the uneven demand for the greenback. Euro shrugged off stronger industrial production to find resistance below 1.19 as the enthusiasm for Spanish assets diminished. Sterling u-turned after hitting its August high during the Asia trading session. There’s little to explain the strength of AUD and NZD outside of short covering after strong downtrends.

*The MAIN THEMES I see today are*

-EUR
-NZD
-CAD
-GBP
mildly -USD

*Trading Biases*

-EUR, -GBP, -CHF, -NZD, -CAD
mildly -USD
neutral JPY, AUD

*Today’s Ideas*

1. Sell NZDUSD at .7113, Stop at .7143, Target .7083
2. Sell NZDJPY at 79.92, Stop at 80.22, Target 79.72
3. Buy USDCAD at 1.2474, Stop at 1.2444, Target 1.2494

Cancel ALL pending orders by 3:30PM NY / 19:30 GMT / 5:30AM AEST
Close ALL open day trades by 4PM NY / 20 GMT / 6AM AEST

Economic Data Calls for 10/11/17

Weekly Calendar Calls

Here’s what we are looking for in tomorrow’s economic reports (Oct 12, 2017) — Good Luck Trading!

1. EZ Industrial Production (5:00 NY Time) Bullish USD -- Potential for upside surprise given stronger than expected rise in GE IP

2. US PPI Final Demand (8:30 NY Time) Bullish USD -- Potential for upside surprise given sharp rise in import prices

Today’s Trades 10.10.2017 – EURUSD, USDCAD, AUDCHF, GBPJPY

Swing

*Good morning/afternoon everyone!*

The U.S. dollar is trading lower across the board and this weakness drove EUR/USD beyond 1.18 and GBP/USD above 1.32. However as we start the North American session, both of these currencies are a bit softer yet the decline in U.S. rates should keep these uptrends intact. These currencies are also supported by data with Germany reporting a larger trade balance and the UK reporting faster industrial and manufacturing production growth. The U.S. dollar on the other hand is lower on fresh concerns about North Korea. Apparently NK told Russia they have an intercontinental missile capable of traveling 3000 km which would put it within reach of US territory. The commodity currencies are up across the board on dollar weakness and higher commodity prices. There are no U.S. economic reports on the calendar today but Fed President Kashkari speaks today along with Bank of Canada Deputy Governor Wilkins.

*The MAIN THEMES I see today are*

+EUR
+GBP
+CAD
-AUD

*Trading Biases*

+EUR, +GBP, +CHF, +CAD
-USD, -AUD, -JPY
mildy -NZD,

*Today’s Ideas*

1. Buy EURUSD at 1.1780, Stop at 1.1750, Target 1.1800
2. Sell USDCAD at 1.2515, Stop at 1.2545, Target 1.2495
3. Sold AUDCHF at .7600, Stop at .7630, Target .7580
4. Buy GBPJPY at 148.25, Stop at 147.95, Target 148.45

Cancel ALL pending orders by 3:30PM NY / 19:30 GMT / 5:30AM AEST
Close ALL open day trades by 4PM NY / 20 GMT / 6AM AEST

NZD/CAD to 88 Cents?

NZD/CAD to 88 Cents?

Chart Of The Day

NZD/CAD to 88 Cents?

NZD/CAD has more room to fall. On a fundamental basis, the New Zealand dollar has recently fallen victim to election uncertainty, lower dairy prices and U.S. dollar strength. These issues will continue to plague the currency after the final votes are counted. The National Party led by Bill English lost 2 seats while the opposition Labour Party led by Jacinda Arden won 1. Both parties need to convince Winston Peters that it is in their interest to form a government which will be a difficult task in the days to come. Peters has said he will make a decision by October 12th but it still not clear whether that will happen. Meanwhile, USD/CAD is losing ground as CAD bulls remain in control. USD/CAD rejected 1.26 on Friday after relatively healthy Canadian data. Although net job growth in Sept was slightly less than anticipated (10K vs. 12K) and the participation rate fell slightly, full time jobs rose at its strongest pace on record. Canada has now experienced its 10th straight month of employment gains and its fastest pace of wage gains in 17 months.

On a technical basis, NZDCAD ended last week at its lows and appears poised for a move down to 88 cents. Gains should be limited by Friday’s high near 0.8950, which is well within our stop limits.