GBP/NZD – Gunning for 1.8000?

*Top 5 Archive Members Only Chart Of The Day

This morning’s UK inflation report was hot, fueling expectations for more hawkishness from the Bank of England. The UK government could trigger Article 50 any day now, but until they do, rate hike expectations could drive GBP to 1.25. UK CPI printed at 2.3% versus 2.1% eyed while core reading rose to the key 2.0% level from 1.8% forecast. The core reading is now above the BoE’s target rate and was the real reason for the pound rally, as currency markets begin to price in the possibility of a rate hike.

The New Zealand dollar, on the other hand, could come under selling pressure on the back of the RBNZ rate decision. Since their last meeting in February, consumer spending has fallen, GDP growth slowed, the trade deficit widened while dairy prices declined. There was some strength in the services and manufacturing sectors but with the currency so strong, we don’t think that will be enough to ease the central bank’s concerns.

Therefore GBP/NZD has scope to rise further. The pair has no significant resistance until 1.7800-1.8000 corridor while support comes in at 1.7400

4 New Orders Ahead of RBNZ and AU Employment

Swing Top 5

Tonight is a BUSY one for the Australian and New Zealand dollars with the RBNZ rate decision and Australian employment report scheduled for release. Many of the major currencies are at key levels and these event risks could drive it beyond those rates. To take advantage of the potential volatility, we are laying out the following new pending orders. Please remember we are STILL long EUR/CHF but since it already hit T1, we can allow for 2 additional open trades before canceling the rest.

Place the following pending orders:

1. Place order to Sell NZD/CAD at 0.8977
Stop at 0.9037
Close 1/2 at 0.8947, move stop to breakeven
Close rest at 0.8825

2. Place order to Buy NZD/CHF at 0.7782
Stop at 0.7722
Close 1/2 at 0.7812, move stop to breakeven
Close rest at 0.7925

3. Place order to Buy EUR/AUD at 1.4228
Stop at 1.4168
Close 1/2 at 1.4258, move stop to breakeven
Close rest at 1.4450

4. Place order to Sell EUR/USD at 1.2835
Stop at 1.2895
Close 1/2 at 1.2805, move stop to breakeven
Close rest at 1.2675

***Remember, if 2 orders trigger without one hitting T1 first, all other orders are canceled

Top 5 01.10.14

*Top 5 Archive Members Only Top 5

TOP 5 HOT IDEAS

DATE: Friday Jan 10, 2014

Guidelines for Top 5 Trading:
Proactive –
Enter trade 20 minutes before data, 25 pip stop, 25 pip first target
Reactive – Enter trade 5 minutes after data release, 20 pip stop, 15 pip target

1. AUD/USD – Australian Chinese Trade Balance



FUNDAMENTALS
Chinese Trade Balance expected @ $32.15B Exports expected at 5% (9 PM ET / 2 GMT)
Our View – Neutral
Reason -- Neutral
If exports grow by 8% or more = Buy AUD/USD
If exports grows by 3% or less = Sell AUD/USD

Chinese trade numbers are scheduled for release this evening and because Chinese data is difficult handicap, it is best traded reactively. The report could have a significant impact on AUD/USD especially given the narrow range that the pair has been trading in. When it comes to the trade numbers, exports are the most important part of the release. Therefore if exports grow by 8% or more, the AUD/USD can be bought for a move higher. If exports grow by 3% or less, the AUD/USD can be sold. REACTIVE TRADE

TECHNICALS

8900 broken
8850 holds for now
Key multi month support

Aussie has been pushed to key multi month support at the 8850 level as it holds just above the 8850 level. A break here could open a run to 8750.

2. EUR/CHF – Swiss Unemployment

FUNDAMENTALS

Swiss Unemployment expected @ 3.4% (1:45 AM ET / 6:45 GMT)
Our View – Neutral
Reason – Neutral
If Switzerland’s unemployment rate is 3.4% or higher = Buy EUR/CHF
If Switzerland’s unemployment rate is 3.1% or less = Sell EUR/CHF

Switzerland’s unemployment rate is difficult to handicap but best traded reactively. If the unemployment rate rises to 3.4% or higher EUR/CHF can be bought for a move higher. If the unemployment rate drops to 3.1% or lower, EUR/CHF can be sold. REACTIVE TRADE

TECHNICALS

2400 caps the up move
2350 near term support
Break of 2400 opens run to 2500

The uptrend in EUR/CHF has run out of steam at the 2400 level and the pair can now correct to 2300, but the longer bullish bias remains in place.

3. GBP/USD – UK Industrial Production

FUNDAMENTALS
Industrial Production @ 0.4% (4:30 AM ET / 9:30 GMT)
Our View – No Trade
Reason – Drop in PMI Manufacturing, but rise in new export orders
If Industrial Production rises by 0.6% or more = Buy GBP/USD
If Industrial Production rises by 0.2% or less = Sell GBP/USD

UK industrial production is scheduled for release tomorrow. While we have small upside bias for the data, the report is best traded reactively because the drop in manufacturing activity in December was offset by a rise in new orders. If industrial production rises by 0.6% or more, the GBP/USD should resume its rally. However if industrial production rises by 0.2% or less, the currency pair can be sold for a move lower. REACTIVE TRADE

TECHNICALS

Takes out 6450
6500 caps
6400 support

Cable has seen relative strength again today as the pair took out the 6450 level and longs tried to push through 6500 level but the pair capped. 6400 is near term support.

4. USD/JPY – US Non-Farm Payrolls

FUNDAMENTALS
Non-Farm Payrolls expected @ 197K (8:30 AM ET / 13:30 GMT)
Our View – Neutral
Reason – Neutral
If NFPs exceed 210K = Buy USD/JPY
If NFPs is 180K or less = Sell USD/JPY

The U.S. non-farm payrolls report is a notoriously volatile piece of data to trade and should only be traded reactively. While the employment component of non-manufacturing ISM increased, pointing to the potential for an upside surprise, the possibility of revisions or divergent changes in the unemployment rate means it is better to wait for the report to come out before taking a trade. If payrolls exceed 210K, USD/JPY can be bought for a squeeze higher. If it is less than 180K, USD/JPY can be sold. REACTIVE TRADE

TECHNICALS

105.00 rally stalls
104.50 near term support
105.50 key to upside

USD/JPY recovery has stalled at the 105.00 level for second day in a row with 105.50 break key to further upside. Meanwhile 104.50 is near term support.

5. USD/CAD – Canadian Employment Report

FUNDAMENTALS
Canadian Employment expected @ 14K (8:30 AM ET / 13:30 GMT)
Our View – Bearish CAD
Reason – Sharp Decline in employment component of IVEY PMI
If Employment is less than 5K = Buy USD/CAD
If Employment exceeds 20K = Sell USD/CAD

We have good reasons to believe that Canadian employment numbers could surprise to the downside because the employment component of IVEY PMI declined. We feel the data can be traded proactively or reactively. For those who choose to wait, if Canadian employment rises by 5K or less, USD/CAD can be bought for a resumption of the uptrend. However if Canadian employment exceeds 20K, USD/CAD can be sold. PROACTIVE or REACTIVE TRADE

TECHNICALS

Break above 1.0850 holds
1.0800 now near term support
Push through 108.50 puts it on track to 1.1000

USD/CAD continues is uptrend move with the break above 1.0850 holding. With a takeout at 1.0850 it is now on track to 1.1000

Top 5 01.09.14

*Top 5 Archive Members Only Top 5

TOP 5 HOT IDEAS

DATE: Thursday Jan 9, 2014

Guidelines for Top 5 Trading:
Proactive –
Enter trade 20 minutes before data, 25 pip stop, 25 pip first target
Reactive – Enter trade 5 minutes after data release, 20 pip stop, 15 pip target

1. AUD/USD – Australian Retail Sales



FUNDAMENTALS
Retail Sales expected @ 0.4% (7:30 PM ET / 23:30 GMT)
Our View – Bearish AUD
Reason – Drop in Sales Component of PMI Services
If Retail Sales rise by 0.7% or more = Buy AUD/USD
If Retail Sales rises by 0.2% or less = Sell AUD/USD

Consumer spending reports are always important because they form the backbone of an economy and Australia’s release is no exception. Australian data has been very weak and in November the sales component of PMI services declined, pointing to a drop in spending. We feel that the Retail Sales report can be traded proactively or reactively. For those who choose to wait, if retail sales rise by 0.7% or more, the AUD/USD can be bought for a reversal higher. If retail sales rise by 0.2% or less, the AUD/USD can be sold for an extension lower. PROACTIVE or REACTIVE TRADE

TECHNICALS

8900 tested again
8950 caps upside
Break of 8900 opens run to 8850

Aussie continues to probe the 8900 support but continues to hold for now. A break of 8900 opens a possible test of multiple support at 8850.

2. GBP/USD -- UK Trade Balance

FUNDAMENTALS

UK Trade Balance expected @ -9.4B (4:30 AM ET / 9:30 GMT)
Our View – Neutral
Reason – Drop in PMI Mfg but Rise in New Orders
If Trade Deficit is -8.9B or better = Buy GBP/USD
If Trade Deficit is -10B or higher = Sell GBP/USD

This month’s UK trade balance report is a tough call because the drop in the PMI manufacturing index was offset by the rise in new orders. This lack of consistency suggests that the data should be traded reactively. For those who choose to wait, if the Trade Deficit is -8.9B or better, the GBP/USD can be bought for a move higher. If the trade deficit is -10B or larger, the GBP/USD can be sold. REACTIVE TRADE

TECHNICALS

Takes out 6450
6500 next target of longs
6400 support

Cable has seen relative strength today as the pair took out the 6450 level and longs now eye the 6500 level as the next target. 6400 is near term support.

3. EUR/USD – ECB Rate Decision

FUNDAMENTALS
ECB President Draghi’s Press Conference scheduled for 8:30 AM ET / 13:30 GMT
Our View – Neutral
Reason – Neutral
If Draghi sounds more optimistic about economy = Buy EUR/USD
If Draghi stresses the possibility of negative rates = Sell EUR/USD

When it comes to the ECB rate announcement, Draghi’s press conference is generally the most important part of the meeting. Economic data since the last meeting has been mixed so we do not anticipate any major changes in the central bank’s stance. However if Draghi sounds more optimistic, the EUR/USD could move higher. If he overlooks the improvements and focuses on the possibility of easier monetary policy, the EUR/USD could weaken. REACTIVE TRADE

TECHNICALS

3550 tested
3650 caps upside
Downtrend resumes

The EUR/USD downtrend has resumed with 3550 tested but held for now, but a break there opens a run to 3500. Meanwhile 3650 caps the upside.

4. USD/JPY – US Jobless Claims

FUNDAMENTALS
Jobless Claims @ 335K (8:30 AM ET / 13:30 GMT)
Our View – Neutral
Reason – Neutral
If jobless claims drop to 325K or less = Buy USD/JPY
If jobless claims rise to 350k or more = Sell USD/JPY

The weekly Jobless claims report is the most important piece of U.S. data on the calendar Thursday. The claims data is difficult to predict and therefore best traded reactively. If jobless claims rise by 325K or less, USD/JPY can be bought for a move higher. If jobless claims rise to 350K or more, USD/JPY can be sold. REACTIVE TRADE

TECHNICALS

105.00 rally stalls
104.50 near term support
105.50 key to upside

USD/JPY recovery has stalled at the 105.00 level with 105.50 break key to further upside. Meanwhile 104.50 is near term support.

5. USD/CAD – Canadian Housing Starts

FUNDAMENTALS
Canadian Housing Starts expected @ 190K (8:15 AM ET / 13:15 GMT)
Our View – Neutral
Reason – Neutral
If Housing Starts are less than 180K = Buy USD/CAD
If Housing Starts rise by 200K or more = Sell USD/CAD

Canada’s housing starts report is not a huge market mover for the Canadian dollar unless there is a big surprise so the data is best traded reactively. If housing starts are less than 180K, USD/CAD can be bought for a quick move higher. If housing starts rise by 220K or more, USD/CAD can be sold. REACTIVE TRADE

TECHNICALS

Break above 1.0800 holds
1.0700 now near term support
Push through 108.50 puts it on track to 1.1000

USD/CAD continues is uptrend move with the break above 1.0800 holding. A takeout at 1.0850 puts it on track to 1.1000

Top 5 01.08.14

*Top 5 Archive Members Only Top 5

TOP 5 HOT IDEAS

DATE: Thursday Jan 8, 2014

Guidelines for Top 5 Trading:
Proactive –
Enter trade 20 minutes before data, 25 pip stop, 25 pip first target
Reactive – Enter trade 5 minutes after data release, 20 pip stop, 15 pip target

1. AUD/USD – PMI Construction



FUNDAMENTALS
PMI Construction expected @ (5:30 PM ET / 22:30 GMT)
Our View – Neutral
Reason – Neutral
If the PMI index exceeds 57 = Buy AUD/USD
If the PMI index is less than 53 = Sell AUD/USD

Australia’s PMI Construction index is not a huge market mover for the Australian dollar unless there is a big surprise so the only opportunity is to trade the report reactively. If the PMI index exceeds 57, the AUD/USD can be bought for a move higher. If the PMI index drops to 53 or less, the AUD/USD can be sold. REACTIVE TRADE

TECHNICALS


8900 tested
8950 caps upside
Break of 8900 opens run to 8850

Aussie survived several runs at the 8900 level but held firm for now. A break of 8900 opens a possible test of multiple support at 8850.

2. EUR/USD – German Trade

FUNDAMENTALS
Trade Balance expected @ 18.9B (2 AM ET / 7 GMT)
Our View – Bullish EUR
Reason – Rise in German PMI, along with new orders and export orders
If the trade surplus exceeds 20B = Buy EUR/USD
If the trade surplus is less 15B = Sell EUR/USD

We have good reasons to believe that Germany will report a stronger trade balance for the month of November because the manufacturing PMI index rose to a 2.5 year high with new orders and export orders rising strongly. Therefore we feel that the data can be traded proactively or reactively. If the trade surplus exceeds 20B, the EUR/USD can be bought for a move higher. If the trade surplus is less than 15B, the EUR/USD can be sold PROACTIVE or REACTIVE TRADE

TECHNICALS

3650 caps the rebound
Downward bias losing momentum
Break below 3550 opens a move to 3350

Euro remains in a corrective phase but the pair has failed to make fresh lows suggesting that some of the downside pressure may be dissipating. 3550-3700 marks the range for now.

3. USD/TRL – Turkish Industrial Production

FUNDAMENTALS
Industrial Production expected @ (3 AM ET / 8 GMT)
Our View – Neutral
Reason – Neutral
If Industrial Production drops by 5% or more = Buy USD/TRL
If Industrial Production rises by 1% or more = Sell USD/TRL

Industrial production numbers are scheduled for release from Turkey tomorrow. Unfortunately the data is difficult to handicap and not incredibly market moving unless there is a big surprise. Therefore we feel that it is best traded reactively. If industrial confidence drops by 5% or more, we expect USD/TRL to rise. If industrial production rises by 1%, we expect USD/TRL to fall. REACTIVE TRADE

TECHNICALS


2.2000 caps upside
2.1000 supports
Upside bias place.

USD/TRY continues its upside bias but the 2.2000 level is now key resistance while 2.1000 provides near term support.

4. USD/CHF – ADP Employment Change


FUNDAMENTALS
ADP expected @ 200K (8:15 AM ET / 13:15 GMT)
Our View – Neutral
Reason – Neutral
If ADP employment change is 225K or higher = Buy USD/CHF
If ADP employment change is 180K or lower = Sell USD/CHF

It is non-farm payrolls week and the focus on the U.S. labor market kicks off with Wednesday’s ADP report. The index is always difficult to handicap and doesn’t have a great track record of forecasting NFPs but is nonetheless a number the market watches carefully. ADP should only be traded reactively. If private payrolls rise by 225K or more, we believe USD/CHF can be bought for a move higher. If payrolls rise by 180K or less, we believe USD/CHF can be sold. REACTIVE TRADE

TECHNICALS


9100 caps move for now
Uptrend in place
Break opens a move to 9200

USD/CHF uptrend maintains momentum but the pair has been capped at 9100 for now. A break above opens a run towards 9200.

5. USD/JPY – FOMC Minutes

FUNDAMENTALS
FOMC Minutes expected @ (2 PM ET / 19 GMT)
Our View – Neutral
Reason – Neutral
If the FOMC minutes show a lot of enthusiasm for tapering = Buy USD/JPY
If FOMC minutes suggests that future decisions should be data dependent = Sell USD/JPY

One of the most important event risks for the U.S. dollar this week will be tomorrow’s FOMC minutes. The central bank will releasing the minutes from its last meeting and given their decision to taper last month, the minutes could have an unusually significant impact on the U.S. dollar. We will be looking for 2 specific details in tomorrow’s release. The first is the motivation for the move and the second is their enthusiasm for a further reduction. The minutes are best traded reactively. If the FOMC minutes show a lot of enthusiasm for tapering with a chorus of central bankers supporting consistent reductions going forward, the dollar can be bought for a move higher. However if there are widespread concerns about the high level of unemployment and low inflation with policymakers emphasizing that a predetermined course is inappropriate and future decisions should be data dependent, the dollar can be sold.
REACTIVE TRADE

TECHNICALS


104.00-105.00 persists
104.00 support holds
Break either way could open wider move.

USD/JPY ended the day at its current equilibrium of 104.50 as it continues to churn between 104.00-105.00 with a break either way leading to a bigger directional move.

Top 5 01.07.14

*Top 5 Archive Members Only Top 5

TOP 5 HOT IDEAS

DATE: Tuesday Jan 7, 2013

Guidelines for Top 5 Trading:
Proactive –
Enter trade 20 minutes before data, 25 pip stop, 25 pip first target
Reactive – Enter trade 5 minutes after data release, 20 pip stop, 15 pip target

1. AUD/USD – Australian Trade Balance



FUNDAMENTALS
Trade Balance expected @ -300M (7:30 PM ET / 0:30 GMT)
Our View – Bearish AUD
Reason – Drop in Manufacturing PMI
If Trade deficit is less than -200M = Buy AUD/USD
If Trade deficit exceeds -600M = Sell AUD/USD

We have good reasons to believe that Australia’s trade deficit widened in the month Nov because the PMI manufacturing index fell sharply that month. Both the new orders and export orders component of the report also deteriorated that month. As such, we believe the data can be traded proactively or reactively. For those who choose to wait, if the Trade deficit is less than -200M, we believe the AUD/USD can be bought for a brief recovery. If Trade deficit exceeds -600M, the AUD/USD can be sold. PROACTIVE or REACTIVE TRADE

TECHNICALS


8800 -9000 range persists
9000 caps upside
8800 provides strong base

Aussie continues to base around the 8800 level but the pair is capped at 9000 as upside break needs the figure to fall in order to start a new uptrend.

2. EUR/USD – German Unemployment

FUNDAMENTALS
German Unemployment expected @ -1K (3:55 AM ET / 8:55 GMT)
Our View – Bullish EUR
Reason – First Rise in Manufacturing PMI since March, Confidence Up
If unemployment rolls drop by 10K or more = Buy EUR/USD
If unemployment rolls rise by 10K or more = Sell EUR/USD

We have good reasons to believe that German labor market conditions improved in the month of December because the employment component of the PMI index increased for the first time since March. As such, we feel that the data can be traded proactively or reactively. If German unemployment rolls drop by 10K or more, we expect the EUR/USD to rise. If unemployment rolls rise by 10K or more, we expect the EUR/USD to decline. PROACTIVE or REACTIVE TRADE

TECHNICALS

3550 holds
Downward bias still in place
Break below 3550 opens a move to 3350

Euro remains in a corrective phase but has found a bid underneath the 3600 level and could make a counter push towards 3700. But a break below 3550 could open a fresh downleg to 3350.

3. USD/JPY – US Trade Balance

FUNDAMENTALS
Trade Balance expected @ -$40B (8:30 AM ET / 13:30 GMT)
Our View – Bearish USD
Reason – Drop in ISM Manufacturing, new export orders down
If Trade deficit is smaller than -$37B = Buy USD/JPY
If Trade deficit exceeds -$42B = Sell USD/JPY

Given the drop in the ISM manufacturing index, we have good reasons to believe that the U.S. trade balance widened in the month of November with new exports down. Therefore we feel that the data can be traded proactively or reactively. If the Trade deficit is smaller than -$37B, USD/JPY can be bought for a move higher. If Trade deficit exceeds -$42B, USD/JPY can be sold. PROACTIVE or REACTIVE TRADE

TECHNICALS


104.00 tested
Correction in place
103.50 key support

USD/JPY saw a test of 104.00 but for now the pair has been able to hold ground, however a break of 103.50 would suggested a deeper correction.

4. USD/CAD – IVEY PMI Index

FUNDAMENTALS
IVEY PMI expected @ 54.5 (10 AM ET / 15 GMT)
Our View – Bullish CAD
Reason – Stronger Wholesale sales
If the PMI index drops below 52 = Buy USD/CAD
If the PMI index exceeds 56 = Sell USD/CAD

We have good reasons to believe that Canadian manufacturing conditions improved in December. Economic activity in general has been mixed with wholesale sales rising. As such, we feel that the data can be traded proactively or reactively. For those who choose to wait, if the PMI index drops below 52, USD/CAD can be bought for a move higher. If it exceeds 56, USD/CAD can be sold. PROACTIVE or REACTIVE TRADE

TECHNICALS


1.0600 remains support
1.0700 caps
Break opens a move to 1.0500

USD/CAD continues to find support at 1.0600 while 1.0700 caps the upside as the pair continues to churn at its upper range.

5. USD/JPY and Nikkei

With no additional data scheduled for release on Tuesday, we want to take this opportunity to share with you one of our favorite charts of the Nikkei and USD/JPY. If you attend our Wednesday World Markets webinar, we talk about the relationship between these 2 instruments often. The chart above highlights the correlation between these 2 instruments and it suggests that USD/JPY’s recent struggle to rally has a lot to do with the sell-off in the Nikkei. Japanese equities sold off aggressively overnight and that was consistent with the decline in USD/JPY.

Top 5 01.06.14

*Top 5 Archive Members Only Top 5

TOP 5 HOT IDEAS

DATE: Monday Jan 6, 2013

Guidelines for Top 5 Trading:
Proactive –
Enter trade 20 minutes before data, 25 pip stop, 25 pip first target
Reactive – Enter trade 5 minutes after data release, 20 pip stop, 15 pip target

1. AUD/USD – PMI Services



FUNDAMENTALS
PMI Services expected @ (5:30 PM ET / 22:30 GMT)
Our View – Bearish AUD
Reason – Lower PMI Manufacturing and confidence
If PMI Manufacturing exceeds 50 = Buy AUD/USD
If PMI Manufacturing index is 46 or lower = Sell AUD/USD

Australia’s PMI manufacturing index is scheduled for release this evening and based on the drop in the manufacturing PMI index and deterioration in consumer confidence, we have strong reasons to believe that the PMI services report will surprise to the downside. Therefore we feel the data can be traded proactively or reactively. For those who choose to wait, if the PMI index exceeds 50, we expect the AUD/USD to rally. If the index drops to 46 or lower, we expect AUD/USD to weaken. PROACTIVE or REACTIVE TRADE

TECHNICALS


While the recent consolidation in AUD/USD suggests that the currency pair is attempting a bottom, the downtrend remains intact as long as AUD/USD remains below 90 cents. A break above this level would open the door for a move to the December high, which crosses with the 38.2% Fibonacci retracement of the 2008 to 2011 rally that took AUD from 60 cents to more than 1.10. If AUD/USD continues to trend lower and breaks below support at the 3 year low of 0.8820, there is no support additional support until the 50% Fib retracement of the same move at 0.8550.

2. NZD/USD – Chinese PMI Services

FUNDAMENTALS
Chinese PMI Non-Manufacturing expected @ (8:45 PM ET / 1:45 GMT)
Our View – Neutral
Reason – Neutral
If PMI Manufacturing exceeds 54 = Buy NZD/USD
If PMI Manufacturing index is 51 or lower = Sell NZD/USD

China’s non-manufacturing PMI report is difficult to handicap but given a large enough surprise could be market moving for the commodity currencies. While the AUD/USD is generally the most receptive to Chinese data, the NZD/USD should also be affected. The data is best traded reactively. If the PMI index exceeds 54, the NZD/USD can be bought for a move higher. If the PMI index drops to 51 or lower, the NZD/USD can be sold. REACTIVE TRADE

TECHNICALS

Over the past few weeks, NZD/USD has been trading in an increasingly narrow range and this has resulted in the formation of a clear triangle pattern. The top of the triangle is right at the 38.2% Fibonacci retracement of the July to October rally and the 50-day SMA. The bottom of the triangle is at the 50% Fib near 0.8110.

3. EUR/USD – Eurozone PMI Services Final

FUNDAMENTALS
EZ PMI Manufacturing expected @ 51 (4 AM ET / 9 GMT)
Our View – Neutral
Reason – Neutral
If PMI is revised up to 52 or higher = Buy EUR/USD
If PMI is revised down to 50 or lower = Sell EUR/USD

The final Eurozone PMI numbers are not expected to have any impact on the euro unless there is are revisions. Therefore the only opportunity is to trade the data is reactively. If the PMI index is revised up to 52 or higher, the EUR/USD can be bought for a move higher. If PMI is revised down to 50 or lower, the EUR/USD can be sold. REACTIVE TRADE

TECHNICALS


After reversing sharply on Friday, EUR/USD reverted back to its range on Monday and Tuesday. The 61.8% Fibonacci retracement of the 2011 to 2012 sell-off at 1.3835 continues to cap gains in the pair. There is near term support at 1.3700, where the 10 and 20-day SMA converge but more significant support for EUR/USD is down at 1.3630, where the 50-day SMA and second standard deviation Bollinger Band meet.

4. GBP/USD – UK PMI Services

FUNDAMENTALS
UK PMI Services expected @ 60.3 (4:30 AM ET / 10:30 GMT)
Our View – Bearish GBP
Reason – Gfk Down, Drop in UK PMI Manufacturing
If UK PMI exceeds 61 = Buy GBP/USD
If UK PMI drops below 59 = Sell GBP/USD

We have good reasons to believe that U.K. service activity deteriorated in the month of December because manufacturing activity deteriorated and consumer confidence declined. As such we feel this data can be traded proactively or reactively. For those who choose to wait, if the PMI index exceeds 61 the GBP/USD can be bought for a quick move higher. If the UK PMI index drops below 59, the GBP/USD can be sold. PROACTIVE or REACTIVE TRADE

TECHNICALS


The best way to look at the price action of the GBP/USD is through the monthly chart because it shows how range bound the currency pair has been in recent years. The break of the 38.2% Fibonacci retracement opens the door for a stronger rally to the 2011 highs at 1.6746. If the currency pair moves lower, there is trendline support at 1.6350 and more significant support at 1.62.

5. USD/JPY – ISM Non-Manufacturing

FUNDAMENTALS
US ISM Non-Manufacturing expected @ 54.5 (10 AM ET / 15 GMT)
Our View – Neutral
Reason – Drop in Manufacturing ISM but Rise in Confidence
If ISM exceeds 55 = Buy USD/JPY
If ISM drops below 53 = Sell USD/JPY

The US’ ISM non-manufacturing report is expected to be a big market mover for the U.S. dollar because of the potential implications for non-farm payrolls. Given the drop in the manufacturing ISM index, the data should be weak but confidence improved making it a tough call. So we feel the data is best traded reactively. If the ISM index exceeds 55, USD/JPY can be bought for a recovery. If it drops to 53 or lower, USD/JPY can be sold. PROACTIVE or REACTIVE TRADE

TECHNICALS


After breaking through 105, the key resistance level is now 105.70, the 61.8% Fibonacci retracement of the 2007 to 2011 sell-off. If this level is broken there is no major resistance until the 200-month SMA (shown in the chart above) at 107.30. The currency pair is in a strong uptrend but should the rally lose momentum, there is near term support at 104 and more significant support down at the December lows of 101.60.

Top 5 01.02.2014

*Top 5 Archive Members Only Top 5

TOP 5 HOT IDEAS

DATE: Thursday Jan 2, 2013

Guidelines for Top 5 Trading:
Proactive –
Enter trade 20 minutes before data, 25 pip stop, 25 pip first target
Reactive – Enter trade 5 minutes after data release, 20 pip stop, 15 pip target

1. AUD/USD – PMI Manufacturing



FUNDAMENTALS
PMI Manufacturing expected @ (5:30 PM ET / 22:30 GMT)
Our View – Neutral
Reason – Neutral
If PMI Manufacturing exceeds 50 = Buy AUD/USD
If PMI Manufacturing index drops below 45 = Sell AUD/USD

Australia’s PMI manufacturing index is scheduled for release tonight and while weaker business confidence and slower Chinese growth suggests that Australian manufacturing conditions may have deteriorated, this data will be released before markets reopen after the New Years holiday and can only be traded reactively. If the PMI index exceeds 50, we expect the AUD/USD to rally in relief. If the index drops to 45 or lower, we expect AUD/USD to weaken. REACTIVE TRADE

TECHNICALS


While the recent consolidation in AUD/USD suggests that the currency pair is attempting a bottom, the downtrend remains intact as long as AUD/USD remains below 90 cents. A break above this level would open the door for a move to the December high, which crosses with the 38.2% Fibonacci retracement of the 2008 to 2011 rally that took AUD from 60 cents to more than 1.10. If AUD/USD continues to trend lower and breaks below support at the 3 year low of 0.8820, there is no support additional support until the 50% Fib retracement of the same move at 0.8550.

2. NZD/USD – HSBC Manufacturing PMI

FUNDAMENTALS
Chinese PMI Manufacturing expected @ 50.5 (8:45 PM ET / 1:45 GMT)
Our View – Neutral
Reason – Neutral
If PMI Manufacturing exceeds 53 = Buy NZD/USD
If PMI Manufacturing index is 49 or lower = Sell NZD/USD

According to HSBC’s flash manufacturing PMI index, manufacturing activity in China slowed in the month of December. While the AUD/USD is generally the most receptive to Chinese data, the NZD/USD will also be affected. Since this is a second revision, it is best traded reactively. For those who choose to wait, if the PMI index exceeds 53, the NZD/USD can be bought for a move higher. If the PMI index drops to 49 or lower, the NZD/USD can be sold. REACTIVE TRADE

TECHNICALS

Over the past few weeks, NZD/USD has been trading in an increasingly narrow range and this has resulted in the formation of a clear triangle pattern. The top of the triangle is right at the 38.2% Fibonacci retracement of the July to October rally and the 50-day SMA. The bottom of the triangle is at the 50% Fib near 0.8110.

3. EUR/USD – Eurozone PMI Manufacturing Final

FUNDAMENTALS
EZ PMI Manufacturing expected @ 52.7 (4 AM ET / 9 GMT)
Our View – Neutral
Reason – Neutral
If PMI is revised up to 54 or higher = Buy EUR/USD
If PMI is revised down to 51 or lower = Sell EUR/USD

Revisions to Eurozone PMI numbers are not expected to have any impact on the euro unless there is a change. Therefore the only opportunity is to trade the data is reactively in our opinion. If the PMI index is revised up to 54 or higher, the EUR/USD can be bought for a move higher. If PMI is revised down to 51 or lower, the EUR/USD can be sold. REACTIVE TRADE

TECHNICALS


After reversing sharply on Friday, EUR/USD reverted back to its range on Monday and Tuesday. The 61.8% Fibonacci retracement of the 2011 to 2012 sell-off at 1.3835 continues to cap gains in the pair. There is near term support at 1.3700, where the 10 and 20-day SMA converge but more significant support for EUR/USD is down at 1.3630, where the 50-day SMA and second standard deviation Bollinger Band meet.

4. GBP/USD – UK Manufacturing PMI

FUNDAMENTALS
UK PMI Manufacturing expected @ 58.4 (4:30 AM ET / 9:30 GMT)
Our View – Bullish GBP
Reason – Sharp rise in CBI
If UK PMI exceeds 59.5 = Buy GBP/USD
If UK PMI drops below 57.5 = Sell GBP/USD

We have strong reasons to believe that U.K. manufacturing activity improved in December because a similar survey conducted by the Confederation of British Industry rose sharply. As such we feel this data can be traded proactively or reactively. For those who choose to wait, if the PMI index exceeds 59.5, the GBP/USD can be bought for a quick move higher. If the PMI index drops below 57.5, the GBP/USD can be sold. PROACTIVE or REACTIVE TRADE

TECHNICALS


The best way to look at the price action of the GBP/USD is through the monthly chart because it shows how range bound the currency pair has been in recent years. The break of the 38.2% Fibonacci retracement opens the door for a stronger rally to the 2011 highs at 1.6746. If the currency pair moves lower, there is trendline support at 1.6350 and more significant support at 1.62.

5. USD/JPY – ISM Manufacturing

FUNDAMENTALS
ISM Manufacturing expected @ 56.8 (10 AM ET / 15 GMT)
Our View – Neutral
Reason –Slight rise in Empire and Philly, Sharp Drop in Chicago
If ISM index exceeds 58 = Buy USD/JPY
If ISM index drops below 55 = Sell USD/JPY

The national ISM manufacturing index can be an important release for the U.S. dollar. We typically like to trade this report proactively but this month, the higher Empire and Philly Fed survey was offset by a large drop in Chicago PMI, making the data difficult to call. Therefore ISM should be traded reactively. If the index exceeds 58, USD/JPY can be bought for a move higher. If it drops below 55, USD/JPY can be sold. REACTIVE TRADE

TECHNICALS


After breaking through 105, the key resistance level is now 105.70, the 61.8% Fibonacci retracement of the 2007 to 2011 sell-off. If this level is broken there is no major resistance until the 200-month SMA (shown in the chart above) at 107.30. The currency pair is in a strong uptrend but should the rally lose momentum, there is near term support at 104 and more significant support down at the December lows of 101.60.

Top 5 12.30.13 – 12.31.13

*Top 5 Archive Members Only Top 5

TOP 5 HOT IDEAS

DATE: Monday Dec 30, 2013

Guidelines for Top 5 Trading:
Proactive –
Enter trade 20 minutes before data, 25 pip stop, 25 pip first target
Reactive – Enter trade 5 minutes after data release, 20 pip stop, 15 pip target

**Holiday Alert: Due to lack of data, we are publishing an abridged version of the Top 5

DATE: Monday Dec 30, 2013

1. GBP/USD – Hometrack Housing Survey



FUNDAMENTALS
Hometrack Housing Survey expected @ (7:01 PM ET / 0:01 GMT)
Our View – Neutral
Reason – Neutral
If Housing Survey index exceeds 0.8% = Buy GBP/USD
If Housing Survey is -0.1% or less = Sell GBP/USD

With many FX traders still off for the holiday, we don’t expect the Hometrack housing survey to have a significant impact on the GBP unless there is a big surprise. Therefore this report should only traded reactively and only if it exceeds our parameters. So if the housing survey rises by 0.8% or more, the GBP/USD can be bought for a quick move higher. However if it drops by 0.1% or more, showing renewed weakness in the housing market, the GBP/USD can be sold for an extension lower. REACTIVE TRADE

TECHNICALS


Normally, Friday’s ugly reversal candle would be sign of a potential turn in the GBP/USD. However the rally in sterling was driven by thin liquidity and as such, the reversal is likely a reversion to normal trading conditions. The best way to look at the price action of the GBP/USD is through the monthly chart because it shows how range bound the currency pair has been in recent years. The break of the 38.2% Fibonacci retracement opens the door for a stronger rally to the 2011 highs at 1.6746. If the currency pair moves lower, there is trendline support at 1.6350 and more significant support at 1.62.

2. EUR/USD – U.S. Pending Home Sales

FUNDAMENTALS
Pending Home Sales expected @ 1% (10 AM ET / 15 GMT)
Our View – Neutral
Reason – Neutral
If Pending Home Sales rise by 0.3% or less = Buy EUR/USD
If Pending Home sales rise by 1.5% or more = Sell EUR/USD

Pending home sales is scheduled for release tomorrow and unfortunately U.S. housing market data has been mixed. Therefore we feel that the report is best traded reactively. If Pending home sales grow by 0.3% or less, the EUR/USD can be bought for a move higher. If Pending home sales rise by 1.5% or more, EUR/USD can be sold. REACTIVE TRADE

TECHNICALS


On Friday, the EUR/USD rose to a 2 year high just shy of 1.39. Unfortunately the pair failed to hold onto those gains and instead reversed sharply to end the day up only marginally. The 61.8% Fibonacci retracement of the 2011 to 2012 sell-off at 1.3835 continues to cap gains in the pair. There is near term support at 1.3700, where the 10 and 20-day SMA converge but more significant support for EUR/USD is down at 1.3630, where the 50-day SMA and second standard deviation Bollinger Band meet.

DATE: Tuesday Dec 31, 2013

1. USD/JPY – Chicago PMI Index

FUNDAMENTALS
Chicago PMI expected @ 60.8 (9:45 AM ET / 14:45 GMT)
Our View – Bullish USD
Reason – Stronger Empire and Philly Fed
If Chicago PMI exceeds 65 = Buy USD/JPY
If Chicago PMI is less than 60 = Sell USD/JPY

The Chicago PMI report is scheduled for release and given the slight rise in the Empire State and Philly Fed surveys, we expect a stronger release. As such we feel that this data can be traded proactively or reactively. If the Chicago PMI index exceeds 65, USD/JPY can be bought for a move higher. If the index drops to 60 or lower, USD/JPY can be sold. PROACTIVE or REACTIVE TRADE

TECHNICALS


USD/JPY broke above 105 on Friday but the key resistance level is 105.70, the 61.8% Fibonacci retracement of the 2007 to 2011 sell-off. If this level is broken there is no major resistance until the 200-month SMA (shown in the chart above) at 107.30. The currency pair is in a strong uptrend but should the rally lose momentum, there is near support at 104 and more significant support down at the December lows of 101.60.

Top 5 12.24.13 – 12.27.13

*Top 5 Archive Members Only Top 5

TOP 5 HOT IDEAS

DATE: Tuesday Dec 24, 2013

Guidelines for Top 5 Trading:
Proactive –
Enter trade 20 minutes before data, 25 pip stop, 25 pip first target
Reactive – Enter trade 5 minutes after data release, 20 pip stop, 15 pip target

**Holiday Alert: Due to lack of data, we are publishing an abridged version of the Top 5

DATE: Tuesday Dec 24, 2013

1. USD/JPY – Durable Goods



FUNDAMENTALS
Durable Goods expected 1.8% (8:30 AM ET / 13:30 GMT)
Our View – Neutral
Reason – Neutral
If Durable Goods orders rises by 2.5% or more = Buy USD/JPY
If Durable Goods orders drop by 1% or more = Sell USD/JPY

The durable goods orders report is notoriously volatile and difficult to trade. So the only opportunity we see is to trade the data reactively. If durable goods orders rise by 2.5% or more, USD/JPY can be bought for a move higher. If orders rise by 1% or less, USD/JPY can be sold. REACTIVE TRADE

TECHNICALS


USD/SGD has been in a very strong uptrend but prices are failing right at the 61.8% Fibonacci retracement of the August to October sell-off. If the currency pair does not manage to close above 1.27, it is vulnerable for drop to the 50% Fib and former breakout point at 1.26. If it extends higher, there could be some resistance at 1.2750.

2. EUR/USD – U.S. New Home Sales

FUNDAMENTALS
New Home Sales expected @ -0.9% (10 AM ET / 15 GMT)
Our View – Bearish USD, Bullish EUR
Reason – Drop in Existing Home Sales
If New Home Sales drop by -4% or more = Buy EUR/USD
If New Home Sales rise by 10% or more = Sell EUR/USD

We have good reasons to believe that new home sales declined in the month of November because existing home sales surprised to the downside. Also, new home sales soared the previous month so a retracement is natural. This data can be traded proactively or reactively. If existing home sales drop by -4% or more, the EUR/USD should rally. If Existing Home Sales rise by 10% or more, the EUR/USD should fall. PROACTIVE or REACTIVE TRADE

TECHNICALS


EUR/USD has been turn mode since failing at 1.38. Support is now at 1.36, the 50-day SMA and below there, 1.35, where the second standard deviation Bollinger Band sits. If EUR/USD starts to recover, the October high of 1.3830 which also happens to be the 61.8% Fibonacci retracement of the 2011 to 2012 sell-off will be the key resistance.

DATE: Thursday Dec 26, 2013

1. USD/CHF – U.S. Weekly Jobless Claims

FUNDAMENTALS
Jobless Claims @ 347K (8:30 AM ET / 13:30 GMT)
Our View – Neutral
Reason – Neutral
If jobless claims drop to 325K or less = Buy USD/CHF
If jobless claims rise to 380k or more = Sell USD/CHF

Jobless claims are scheduled for release on Thursday and given the sharp deterioration the week prior, a rebound is expected. The claims data in general is difficult to predict and therefore best traded reactively. If jobless claims rise by 325K or less, USD/CHF can be bought for a move higher. If jobless claims rise to 380K or more, USD/CHF can be sold. REACTIVE TRADE

TECHNICALS


The rally in EUR/CHF looks like a dead cat bounce. There is major resistance above current levels at 1.2310, where the 100-day and 200-day SMA converge. 1.22 is near term support but the swing low of 1.2167 is the key level to watch.

DATE: Friday Dec 27, 2013

1. USD/JPY – Japanese Industrial Production

FUNDAMENTALS
Industrial Production expected @ 0.4% (6:50 PM ET / 23:50 GMT)
Our View – Neutral
Reason – Neutral
If Industrial Production falls by 0.1% or more = Buy USD/JPY
If Industrial Production rises by 1% or more = Sell USD/JPY

A number of Japanese economic reports are scheduled for release on Thursday evening / Friday morning in Japan. Of these releases, we feel that industrial production is the most important. Unfortunately the data is difficult to handicap and therefore best traded reactively. If industrial production drops by 0.1% or more, USD/JPY can be bought for a move higher. If industrial production rises by 1% or more, USD/JPY can be sold. REACTIVE TRADE

TECHNICALS


Friday’s ugly reversal candle in USD/CAD points to further losses for the pair. The current move should extend to the first standard deviation Bollinger Band at 1.0575 and a break below the December low of 1.0560 would open the door for a stronger sell-off to 1.05. However if USD/CAD manages to regain its upside momentum, its 3 year high of 1.0737 is key resistance and above there the 2010 high of 1.0854.

Top 5 12.23.13

*Top 5 Archive Members Only Top 5

TOP 5 HOT IDEAS

DATE: Monday Dec 23, 2013

Guidelines for Top 5 Trading:
Proactive –
Enter trade 20 minutes before data, 25 pip stop, 25 pip first target
Reactive – Enter trade 5 minutes after data release, 20 pip stop, 15 pip target

1. USD/SGD – Singapore Consumer Prices



FUNDAMENTALS
CPI expected @ 0.9% (0 AM ET / 5 GMT)
Our View – Neutral
Reason – Neutral
If CPI growth is 0.2% or less = Buy USD/SGD
If CPI growth exceeds 1.3% = Sell USD/SGD

Singapore’s consumer price report is due for release on Monday and the data is best traded reactively. Inflationary pressures are expected to increase and if economists are right and CPI rises by 1.3% or more, we expect USD/SGD to sell-off. If CPI growth is less than 0.2%, we expect USD/SGD to rise. REACTIVE TRADE

TECHNICALS


USD/SGD has been in a very strong uptrend but prices are failing right at the 61.8% Fibonacci retracement of the August to October sell-off. If the currency pair does not manage to close above 1.27, it is vulnerable for drop to the 50% Fib and former breakout point at 1.26. If it extends higher, there could be some resistance at 1.2750.

2. EUR/USD – German Import Prices

FUNDAMENTALS
German Import Prices expected @ -0.1% (2 AM ET / 7 GMT)
Our View – Neutral
Reason – Neutral
If import prices grow by 0.5% or more = Buy EUR/USD
If import prices drop by -1% or more = Sell EUR/USD

With inflationary pressures in the region muted, German import prices are also not expected to have a large impact on the euro unless there is a sizeable surprise. Therefore this report should only traded reactively and if it exceeds our parameters. If import prices grow by 0.5% or more, the EUR/USD can be bought for a move higher. If import prices drop by 1% or more, the EUR/USD can be sold. REACTIVE TRADE

TECHNICALS


EUR/USD has been turn mode since failing at 1.38. Support is now at 1.36, the 50-day SMA and below there, 1.35, where the second standard deviation Bollinger Band sits. If EUR/USD starts to recover, the October high of 1.3830 which also happens to be the 61.8% Fibonacci retracement of the 2011 to 2012 sell-off will be the key resistance.

3. EUR/CHF – UBS Consumption Index


FUNDAMENTALS
UBS Consumption Indicator @ (2AM ET / 7GMT)
Our View – Neutral
Reason – Neutral
If UBS Consumption Indicator is less than 1.10 = Buy EUR/CHF
If UBS Consumption Indicator exceeds 1.50 = Sell EUR/CHF

Switzerland’s economic calendar is generally very light but there are a handful of economic releases worth watching month to month and this includes the UBS Consumption indicator which is a measure of demand. Unfortunately the data is difficult to handicap and best traded reactively only on a meaningful surprise. If the index drops to 1.10 or lower, EUR/CHF can be bought for an extension higher. If it is rises to 1.50, EUR/CHF can be sold. REACTIVE TRADE

TECHNICALS


The rally in EUR/CHF looks like a dead cat bounce. There is major resistance above current levels at 1.2310, where the 100-day and 200-day SMA converge. 1.22 is near term support but the swing low of 1.2167 is the key level to watch.

4. USD/CAD – Canadian GDP

FUNDAMENTALS
Oct GDP expected @ 0.1% (8:30 AM ET / 13:30 GMT)
Our View – Neutral
Reason – Weaker Retail Sales, Stronger Trade
If GDP stagnates or declines = Buy USD/CAD
If GDP growth exceeds 0.5% = Sell USD/CAD

The 2 main components of GDP are retail sales and trade and while spending improved in October, trade activity in Canada weakened. As such, we feel that the data can only be traded reactively. If GDP stagnates or declines, USD/CAD can be bought for a move higher. If GDP growth exceeds 0.5%, USD/CAD can be sold. REACTIVE TRADE

TECHNICALS


Friday’s ugly reversal candle in USD/CAD points to further losses for the pair. The current move should extend to the first standard deviation Bollinger Band at 1.0575 and a break below the December low of 1.0560 would open the door for a stronger sell-off to 1.05. However if USD/CAD manages to regain its upside momentum, its 3 year high of 1.0737 is key resistance and above there the 2010 high of 1.0854.

5. USD/JPY – Personal Income and Personal Spending

FUNDAMENTALS
Personal Income & Personal Spending expected @ 0.5% (8:30 AM ET / 13:30 GMT)
Our View – Bullish USD
Reason – Rise in average hourly earnings and retail sales
If Personal Income AND Spending exceeds 0.8% = Buy USD/JPY
If Personal Income AND Spending grows by 0.2% or less = Sell USD/JPY

We have good reasons to believe that this month’s personal income and spending numbers will surprise to the upside because average hourly earnings and spending increased. As a result, the data can be traded proactively or reactively. For those who choose to wait, if personal income and spending exceeds 0.8%, USD/JPY can be bought for a recovery trade higher. If personal spending and income grows by less than 0.2%, USD/JPY can be sold. PROACTIVE or REACTIVE TRADE

TECHNICALS

USD/JPY is in a very strong uptrend according to our double Bollinger Bands. 105 is an important psychological resistance level that the pair could find difficult to break but the key resistance level is 105.70, the 61.8% Fibonacci retracement of the 2007 to 2011 sell-off. Support on the other hand is at the trendline of 103 and more significantly the December lows of 101.60.

Top 5 12.20.13

*Top 5 Archive Members Only Top 5

TOP 5 HOT IDEAS

DATE: Friday Dec 20, 2013

Guidelines for Top 5 Trading:
Proactive –
Enter trade 20 minutes before data, 25 pip stop, 25 pip first target
Reactive – Enter trade 5 minutes after data release, 20 pip stop, 15 pip target

1. USD/JPY – Bank of Japan Rate Decision



FUNDAMENTALS
BoJ Announcement expected @ (TBD but usually around 1 AM ET / 6 GMT)
Our View – Neutral
Reason – Neutral
If BoJ leaves monetary policy unchanged = No Trade
If BoJ Eases monetary policy = Buy USD/JPY

This month’s Bank of Japan meeting is expected to be a nonevent for the Yen because the central bank is comfortable with the current level of policy. If the BoJ leaves their asset purchase program and interest rates unchanged like we expect, the BoJ meeting will be a nonevent for USD/JPY, which is why we think the meeting can only be traded reactively. However if for whatever reason the BoJ decides to ease monetary policy, which we don’t expect, then we believe USD/JPY can be bought for a stronger move higher. REACTIVE TRADE

TECHNICALS

Consolidation around 104.00
103.50 near term support
104.50 key to further upside

USD/JPY has continued to consolidate around the 104.00 level with 103.50 providing support while a break of 104.50 opens the run to the key 105.00 level.

2. EUR/USD – German Producer Prices

FUNDAMENTALS
PPI expected @ -0.1% (2 PM ET / 7 GMT)
Our View – Bullish EUR
Reason – Smaller Decline in Wholesale Prices
If GE PPI rises by 0.4% or more = Buy EUR/USD
If GE PPI declines by -0.4% or more = Sell EUR/USD

We have good reasons to believe that Germany’s producer price report will surprise to the upside because wholesale prices, which measure a similar subset of goods dropped at a slower pace. As a result, we believe that the data can be traded proactively or reactively. For those who choose to wait, if producer prices rise by 0.4% or more, the EUR/USD can be bought for a move higher. If PPI declines by -0.4% or more, the EUR/USD can be sold. PROACTIVE or REACTIVE TRADE

TECHNICALS

3650 holds
3750 resistance to upside
Bearish bias in place

The euro held steady in quiet trade today after a major reversal as 3650 continued to provide support. The pair has deeper support at 3600 while 3750 caps any upside for now.

3. GBP/USD – Q3 Current Account and GDP

FUNDAMENTALS
Current Account expected @ -14B & Q3 GDP expected @ 0.8% (4:30 AM ET / 9:30 GMT)
Our View – Bearish GBP
Reason – Weaker Trade Numbers in Q3
If Current Account Deficit is smaller than -12B & Q3 GDP is 0.9% or better = Buy GBP/USD
If Current Account Deficit exceeds -15B & Q3 GDP is 0.7% or worse = Sell GBP/USD

We have good reasons to believe that the U.K.’s current account deficit increased in the third quarter because trade activity, which is one of the primary components of current account widened in Q3. GDP growth on the other hand is not expected to be revised. The data can be traded proactively or reactively. For those who choose to wait, if the current account deficit is smaller than -12B & GDP is revised up to 0.9% or higher, we expect the GBP/USD to rise. If the current account deficit exceeds -15B & Q3 GDP is revised down to 0.7% or worse, we expect the GBP/USD to fall. PROACTIVE or REACTIVE TRADE

TECHNICALS

6350 holds
Remains close to yearly highs
Bullish bias still present

Cable has been remarkably unfazed by the past days events and continues to hold bid near the yearly highs. 6350 offers near term support while 6450 caps upside for now

4. USD/JPY – Final Q3 GDP

FUNDAMENTALS
GDP expected @ 3.6% (8:30 AM ET / 13:30 GMT)
Our View – Neutral
Reason – Neutral
If GDP is revised up to 3.7% = Buy USD/JPY
If GDP is revised down to 3.5% = Sell USD/JPY

U.S. GDP numbers are scheduled for release tomorrow but no revisions are expected. Therefore the data should only be traded reactively. If GDP is revised up to 3.7% or higher, we expect USD/JPY to rally. If GDP is revised down to 3.5% or lower, we expect USD/JPY to sell off. REACTIVE TRADE

TECHNICALS

Consolidation around 104.00
103.50 near term support
104.50 key to further upside

USD/JPY has continued to consolidate around the 104.00 level with 103.50 providing support while a break of 104.50 opens the run to the key 105.00 level.

5. USD/CAD – Canadian Retail Sales

FUNDAMENTALS
Retail Sales expected @ 0.2% (8:30 AM ET / 13:30 GMT)
Our View – Bullish CAD
Reason –Strong Rise in Employment and Wholesale Sales Growth
If Retail sales growth declines by -0.1% or more = Buy USD/CAD
If Retail sales growth exceeds 0.5% = Sell USD/CAD

We have good reasons to believe that Canadian retail sales will surprise to the upside because wholesale sales rose strongly and employment increased. Therefore we feel that the data can be traded proactively or reactively. For those who choose to wait, if retail sales growth declines by -0.1% or more, USD/CAD can be bought for a move higher. If retail sales growth exceeds 0.5%, USD/CAD can be sold. PROACTIVE or REACTIVE TRADE

TECHNICALS

1.0700 sets the top
1.0600 supports
The rally stalls

The rally in USD/CAD has clearly stalled ahead of the 1.0700 level and the pair may now correct towards 1.0600 as it works off some of the overbought sentiment.