*Good morning/afternoon everyone!* The U.S. dollar is trading lower against most of the major currencies this morning as risk appetite improves after yesterday’s brutal selling. Stock futures are up, helping to bolster pairs like EUR/USD and USD/JPY. However as we begin the NY session, the decline in Treasury yields could also tip the scale and push USD/JPY lower. Yen crosses on the other hand will take their cue from stocks today. The currency most vulnerable to weakness is the Canadian dollar because oil prices are down more than 2% after President Trump tweeted that he hopes Saudi Arabia and OPEC will not cut oil production because he thinks oil prices should be much lower based on supply. Despite a softer Eurozone ZEW survey, EUR/USD is trading above 1.1250 on the hope that progress could be made on the Italian budget front. the expectations component of the ZEW surely also increased. The best performing currency this morning is sterling which is up on higher wages (despite a higher unemployment rate) and continued Brexit optimism. On the Brexit front, we are getting closer to a deal but with some counterproductive headlines, traders are still reluctant to overload sterling positions but when an announcement is made, we can almost be assured that there will be a strong followup rally. AUD and NZD are also up from yesterday but having risen strongly in Asian trade, they are mostly consolidating and even weakening slightly. We also have our eyes on the Swiss Franc which appears to be topping below 1.0130. *The MAIN THEMES I see today are* +EUR +CHF -CAD -JPY *Trading Biases* +EUR, +CHF, +GBP, -CAD, -JPY mildly +AUD, +NZD, -USD *Today’s Initial Trades* Here’s the summary – 1. Buy EURCAD at 1.4885, Stop at 1.4857, Target 1.4912 2. Buy EURUSD at 1.1247, Stop at 1.1219, Target 1.1275 3. Buy AUDCAD at .9531, Stop at .9503, target .9559 4. Sell AUDCHF at .7270, Stop at .7298, Target .7242

Swing

*Good morning/afternoon everyone!*

The U.S. dollar is trading lower against most of the major currencies this morning as risk appetite improves after yesterday’s brutal selling. Stock futures are up, helping to bolster pairs like EUR/USD and USD/JPY. However as we begin the NY session, the decline in Treasury yields could also tip the scale and push USD/JPY lower. Yen crosses on the other hand will take their cue from stocks today. The currency most vulnerable to weakness is the Canadian dollar because oil prices are down more than 2% after President Trump tweeted that he hopes Saudi Arabia and OPEC will not cut oil production because he thinks oil prices should be much lower based on supply. Despite a softer Eurozone ZEW survey, EUR/USD is trading above 1.1250 on the hope that progress could be made on the Italian budget front. the expectations component of the ZEW surely also increased. The best performing currency this morning is sterling which is up on higher wages (despite a higher unemployment rate) and continued Brexit optimism. On the Brexit front, we are getting closer to a deal but with some counterproductive headlines, traders are still reluctant to overload sterling positions but when an announcement is made, we can almost be assured that there will be a strong followup rally. AUD and NZD are also up from yesterday but having risen strongly in Asian trade, they are mostly consolidating and even weakening slightly. We also have our eyes on the Swiss Franc which appears to be topping below 1.0130.

*The MAIN THEMES I see today are*

+EUR
+CHF
-CAD
-JPY

*Trading Biases*

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

*Today’s Initial Trades*

Here’s the summary --

1. Buy EURCAD at 1.4885, Stop at 1.4857, Target 1.4912
2. Buy EURUSD at 1.1247, Stop at 1.1219, Target 1.1275
3. Buy AUDCAD at .9531, Stop at .9503, target .9559
4. Sell AUDCHF at .7270, Stop at .7298, Target .7242

NZD – Double Top at .7400?

NZD – Double Top at .7400?

Chart Of The Day

The kiwi has been a stealth rally since the start of the year but it may be finding tough resistance at the .7400 level. Last night the pair was pushed to a high of .7376 on the back of hotter than expected inflation data, but the days’ reversal should make bulls cautious ahead of the RBNZ announcement tomorrow.

The RBNZ is expected to keep rates on hold, but the market will look for any signs the central bank may be willing to cut rates further. Although inflation is picking up, the recent labor data was disappointing with wage growth particularly weak. On the other hand, the latest Dairy auction saw prices rise suggesting that demand for country’s principal export remains strong.

If the RBNZ is relatively sanguine, the kiwi could make another foray to the .7400 figure, but any move above that level would require further weakness in the buck.

NZD – Back to 7300?

NZD – Back to 7300?

Chart Of The Day

Kiwi has found its footing over the past few days and the pair looks ready to make another run at the 7300 level over the next several days. The latest data from the Dairy Auctions has been encouraging as prices have stabilized and are starting to rise. Furthermore, the economic data from New Zealand suggests that growth remains on track and RBNZ would be hard pressed to cut rates much beyond the 25bps already factored in.

Tonight’s NZ Employment report could be key. The market is looking only for a modest change of 0.6% from 2.4% the period prior, but the unemployment rate is expected to stay at 5.1%. If the data meets or beats expectations, the kiwi could easily take out the 7200 figure and push onward to 7300 as the week proceeds.

Technically the pair has made a bullish higher double bottom ahead of .7100 and as long it holds those levels it looks constructive form the long side.

How Low Could NZD Fall?

How Low Could NZD Fall?

Chart Of The Day

How Low Could NZD Fall?

The Reserve Bank of New Zealand surprised the market with a 25bp rate cut and a warning that further easing may be required. The decision to lower rates to 2.25% from 2.50% caught almost every economist and investor off guard and sent the currency spiraling lower. According to the monetary policy statement, the decision was motivated by low inflation as the central bank cut their 2016 Q1 annual inflation outlook from 1.2% to 0.4%. They also lowered their Q4 2016 annual inflation rate to 1.1% from 1.6%. The Reserve Bank now expects their 2% inflation target to be reached in the first quarter of 2018 vs. the fourth quarter of 2017. Domestic risks contributed to the decline in inflation expectations and their worry that prices will remain low for some time before recovery. China building and manufacturing sectors are also under significant stress creating a number of serious imbalances – they are clearly more worried about China than their Australian counterparts.

Technically, today’s decline in NZD/USD took the currency pair back into its previous 0.6550 to 0.6800 range. While the post RBNZ decline stopped right above the 100-day SMA, at minimum we are looking for a move to trend line resistance at 0.6625 and more likely a test of 66 cents. The last time the RBNZ surprised the market with a rate cut was in June of last year and NZD/USD dropped 500 pips. That was the first rate cut since 2011. Having lowered rates last year, today’s reduction is not as significant on a historical basis but still represents a material surprise that could eventually take NZD/USD down to 65 cents.

Trading NZD Ahead of RBNZ

Trading NZD Ahead of RBNZ

Chart Of The Day

Trading NZD Ahead of RBNZ

The New Zealand dollar is trading strongly ahead of the Reserve Bank’s monetary policy announcement and the question tomorrow will be whether the economy deteriorated enough to warrant three back-to-back rate cuts. Every one of the 17 economists surveyed by Bloomberg expect a 25bp rate cut but at the last meeting, the central bank dropped its reference to NZD being at an unjustified level which suggested they could keep rates steady in September. While there have been widespread problems in China, taking a look at the second table below, consumer spending, job ads and the housing market saw improvements since the last meeting. Dairy prices also increased at the last 2 auctions leaving the Global Dairy Trade index at a higher level in September compared to July. For these reasons, we believe that another rate cut is not a done deal and if we are right, the New Zealand dollar will spike higher.

Technically, NZD/USD still remains in a downtrend with near term resistance at the September highs right above 64 cents. If this level is broken, there’s no major resistance until 65 cents. On the downside, the August 24th spike low at 62 cents is support.

BK Big Trades – Stopped out of NZD/CHF

Swing

BK Big Trades -- Stopped out of NZD/CHF

NZD/CHF Big Trade -- The Ultimate Carry Trade

The Trade:

NZD/CHF


Buy NZD/CHF at market (now 0.6715)

Stop for whole position at 0.6500

Targeting move to and above 70 cents

Risk on our BIG TRADES is large, so make sure your position is small.

We will manage the take profit dynamically and send out alerts on when to take profit and/or move your stop.

—--

We Like the New Zealand Dollar

A few weeks ago, we bought ourselves some NZD/CAD on the premise that dairy prices would bottom before oil. Today, oil prices are down 4% while dairy prices settled at higher levels for the third auction in a row. We traded the currency pair, taken money off the table and are now shifting our focus to the ultimate carry trade -- NZD/CHF.

Lets start with the New Zealand dollar. NZD fell sharply today on the back of a more modest increase in dairy prices. While it would have been nice to see dairy prices rise by a larger amount, the fact that prices increased at the last 3 auctions is GREAT news for New Zealand. Earlier this month, dairy prices rose 3.6% the biggest increase in 12 months -- matching that pace would have been unrealistic. Considering that dairy is New Zealand’s biggest export earner, accounting for approximately 30% by value, this increase will bolster the confidence of the RBNZ who meets next week.

The last time we heard from the central bank, they were surprisingly comfortable with the current level of monetary policy and while they felt that the New Zealand dollar value was unjustified and unsustainable, they also believed that further policy adjustment will be necessary after a period of assessment. In other words, they are still looking to raise interest rates -- eventually. Their hawkish monetary policy bias and 3.5% interest rate will prevent NZD from falling much further and instead lead to a recovery in the very near future especially if the ECB rolls out Quantitative Easing, forcing investors to look elsewhere for yield.

NZD/CHF -- The Ultimate Carry Trade

Buying the New Zealand dollar against the Swiss Franc is the ultimate carry trade. In addition to abandoning their 1.20 peg, the Swiss National Bank also deepened the negative rate environment by cutting rates 50 basis points to negative 0.75%. Last week, the SNB made the conscious decision to shift from exchange rate to interest rate driven monetary policy. If the recent appreciation in the Franc poses a major threat to the Swiss economy, they could lower interest rates further -- increasing the attractiveness of selling Francs. Even if they don’t and other central banks lower rates, NZD will become more attractive as a result. We also believe that most if not all of the long EUR/CHF trades have been flushed out with all stops already triggered.

Chart -- NZD/CHF Headed for 70 cents.

We think NZD/CAD is eventually headed for 0.70 or higher and our stop of 0.6500 is well below pre-SNB levels. Here’s the trade:

NZD/CHF

Buy NZD/CHF at market (now 0.6715)

Stop for whole position at 0.6500

Risk on our BIG TRADES is large, so make sure your position is small.

We will manage the take profit dynamically and send out alerts on when to take profit and/or move your stop.

BKSWING – ADD New order to Sell GBP/USD 1.6673 Stop at 1.6733 Close 1/2 at 1.6643 Close rest at 1.6525

Swing

BKSWING -- ADD New order to Sell GBP/USD 1.6673

Stop at 1.6733

Close 1/2 at 1.6643

Close rest at 1.6525

We still have the following pending orders:

1. Sell EUR/USD at 1.3265

Stop at 1.3325

Close 1/2 at 1.3235, move stop to breakeven

Close rest at 1.3125

2. Buy EUR/NZD at 1.5927

Stop at 1.5867

Close 1/2 at 1.5957, move stop to breakeven

Close rest at 1.6085

3. Sell EUR/NZD at 1.5672

Stop at 1.5732

Close 1/2 at 1.5642, move stop to breakeven

Close rest at 1.5476

4. Buy EUR/GBP at 0.8060

Stop at 0.8000

Close 1/2 at 0.8090, move stop to breakeven

Close rest at 0.8150

5. Sell NZD/USD at 0.8373

Stop at 0.8433

Close 1/2 at 0.8343, move stop to breakeven

Close rest at 0.8210

6. Sell AUD/USD at 0.9175

Stop at 0.9235

Close 1/2 at 0.9145, move stop to breakeven

Close rest at 0.9015

7. Sell AUD/NZD at 1.0883

Stop at 1.0943

Close 1/2 at 1.0853, move stop to breakeven

Close rest at 1.0710

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

BKSWING – New NZD and EUR/JPY Orders 07.23.14

Swing

***We are still short GBP/USD

Over the next 24 hours we have NZD, EUR and GBP are in play with the RBNZ rate decision, Eurozone PMIs and UK Retail Sales reports scheduled for release. Of these, the biggest market mover will undoubtedly be the RBNZ decision because the Reserve Bank is expected to raise interest rates for the fourth time in a row AND provide the market with fresh guidance. Many market participants are looking for the RBNZ to pause after tonight’s rate hike and if they do, it will be negative for NZD. However if they choose to forge forward and raise rates again in Sept, then it will be extremely positive for NZD. Weaker UK retail sales on the other hand will accelerate losses for GBP while softer PMIs could drive EUR/JPY below 136.

Given these views, Place the following NEW pending orders:

1. Sell GBP/NZD at 1.9538

Stop at 1.9598

Close 1/2 at 1.9508, move stop to breakeven

Close rest at 1.9475

2. Sell NZD/USD at 0.8585

Stop at 0.8645

Close 1/2 at 0.8555, move stop to breakeven

Close rest at 0.8425

3. Buy NZD/CHF at 0.7912

Stop at 0.7852

Close 1/2 at 0.7942, move stop to breakeven

Close rest at 0.8075

4. Sell NZD/CHF at 0.7720

Stop at 0.7780

Close 1/2 at 0.7690, move stop to breakeven

Close rest at 0.7550

5. Sell EUR/JPY at 135.83

Stop at 136.43

Close 1/2 at 135.53, move stop to breakeven

Close rest at 133.50

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

BKSWING – New AUD and NZD Orders for 07.08.14

Swing

The New Zealand dollar is on a tear this morning thanks to rating agency Fitch’s decision to upgrade the country’s outlook. Even without today’s announcement, AUD and NZD are in play this week with key economic reports scheduled for release. We think there could be additional volatility in both currencies and are laying out the following pending orders to take advantage of the potential moves:

Place the following NEW pending orders:

1. Sell EUR/AUD at 1.4332

Stop at 1.4392

Close 1/2 at 1.4302, move stop to breakeven

Close rest at 1.4180

2. Buy EUR/AUD at 1.4628

Stop at 1.4568

Close 1/2 at 1.4658, move stop to breakeven

Close rest at 1.4775

3. Sell EUR/NZD at 1.5368

Stop at 1.5428

Close 1/2 at 1.5338, move stop to breakeven

Close rest at 1.5215

4. Buy NZD/JPY at 90.23

Stop at 89.63

Close 1/2 at 90.53, move stop to breakeven

Close rest at 92.25

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

BKSWING – 4 New GBP and NZD Trades for 06.16.14

Swing

The British pound is on the move today and will be in play this week with UK CPI, Bank of England minutes and retail sales scheduled for release. Given BoE Governor Carney’s recent hawkishness, we think sterling will continue to trend higher especially ahead of the minutes. We will be laying out 3 GBP orders to take advantage of this opportunity. While EUR bounced this morning, we expect NZD to continue to outperform especially with current account and GDP numbers scheduled for release this week. If tomorrow’s dairy auction surprises to the upside, we could see an even more aggressive rally in NZD.

1. Buy GBP/USD at 1.7060

Stop at 1.7000

Close 1/2 at 1.7090, move stop to breakeven

Close rest at 1.7350

2. Buy GBP/JPY at 174.12

Stop at 173.52

Close 1/2 at 174.42, move stop to breakeven

Close rest at 175.75

3. Sell GBP/USD at 1.6885

Stop at 1.6945

Close 1/2 at 1.6855, move stop to breakeven

Close rest at 1.6750

4. Sell EUR/NZD at 1.5543

Stop at 1.5603

Close 1/2 at 1.5513, move stop to breakeven

Close rest at 1.5225

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

BKSWING – New AUD and NZD Trades ahead of RBNZ, AU Employment

Swing

We’ve got less than 24 hours to go before this week’s most important event risk -- the RBNZ rate decision. The RBNZ is widely expected to raise interest rates but they have every reason to keep them unchanged if they choose to do so. Between their decision on what to do with interest rates this month and forward guidance, NZD should have an unusually large reaction to the monetary policy announcement. We are laying out a few NZD orders to take advantage of that opportunity. At the same time, Australian employment is also one of this week’s top reports and the state of the labor market will play a big role in whether the currency fails at or takes out its year to date high.

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

New Pending Orders

1. Sell EUR/NZD at 1.5738

Stop at 1.5798

Close 1/2 at 1.5708, move stop to breakeven

Close rest at 1.5595

2. Buy NZD/USD at 0.8650

Stop at 0.8590

Close 1/2 at 0.8680, move stop to breakeven

Close rest at 0.8775

3. Buy GBP/NZD at 1.9710

Stop at 1.9650

Close 1/2 at 1.9740, move stop to breakeven

Close rest at 1.9900

4. Buy GBP/AUD at 1.7962

Stop at 1.7902

Close 1/2 at 1.7992, move stop to breakeven

Close rest at 1.8150

5. Buy AUD/NZD at 1.1067

Stop at 1.1007

Close 1/2 at 1.1097, move stop to breakeven

Close rest at 1.1200

We still have the following pending orders:

1. Sell GBP/JPY at 170.77

Stop at 171.37

Close 1/2 at 170.47, move stop to breakeven

Close rest at 169.57

2. Sell EUR/JPY at 137.77

Stop at 138.37

Close 1/2 at 137.47, move stop to breakeven

Close rest at 136.27

3. Sell EUR/GBP at 0.8044

Stop at 0.8104

Close 1/2 at 0.8014, move stop to breakeven

Close rest at 0.7950

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