EURUSD – Bottom in Place?

EURUSD – Bottom in Place?

Chart Of The Day

The EUR/USD which made a near 300 pip round trip in post Italian referendum trade yesterday, first dropping to a low 1.0504 and the spiking to 1.0798, was much calmer today but remained near the two day highs and within striking distance of the 1.0800 figure.

yesterday’s price action suggests that the pair may have made a near term bottom and could continue to squeeze higher even possibly towards the 1.1000 figure especially if ECB President Mario Draghi offers no definitive calendar extensions to the QE program.

Ultimately the euro may be headed to parity as the policy divergence between the Fed and the ECB begins to kick in. But for now the market is still looking for the Fed to affirm its intention to tighten continuously in 2017 rather than the one-and-done December hike that is already priced into the market. Meanwhile, if the ECB simply sticks to its current QE targets and doesn’t extend or expand the program, the short squeeze in the EURUSD could continue as expectations are adjusted on both sides of the trade.

For now the 1.0500-1.0550 level is a firm bottom while 1.0900 is the nearest term top for the pair.

AUDUSD – A Top in Place?

AUDUSD – A Top in Place?

Chart Of The Day

The Aussie was the worst performing currency in the G-10 universe today as it crashed for more than 100 points after the AU employment recorded a whopping -53K loss in full time jobs. As we noted earlier, “the overall report was not positive for the labor markets and suggests that some sort of slowdown in Australian is clearly occurring. Whether this surprising decline in employment growth will be enough to nudge the RBA off its neutral stance remains to be seen. Most analysts believe that the central bank will ignore the data unless there emerges a pattern of at least three months of sub-par growth.”

Meanwhile the pair has made clear triple top at the .7750 level and now becomes a sell the rally trade as it likely travels to the lower part of the range at the .7450 level over the next several weeks.

EUR/USD – Top in Place?

EUR/USD – Top in Place?

Chart Of The Day

EUR/USD – Top in Place?

After an extended uptrend that has lasted for more than 3 weeks, the EUR/USD has finally closed below the first standard deviation Bollinger Band. On a technical basis, this signals that the currency pair has seen a top. EUR/USD has broken below the 23.6% Fibonacci retracement of the 2014 to 2015 decline and is below the 100- week SMA which signals potential for a deeper correction. Short term support comes in at the 100-day SMA near 1.1225 but we expect that level to be broken. We only need to be worried about a significant reversal if EUR/USD exceeds the August high of 1.1370.

Fundamentally, there were no revisions to second quarter German GDP numbers but exports and imports were slightly stronger. Earlier this week we learned that manufacturing and service sector activity in the Eurozone’s largest economy slowed during the month of August. This does not bode well for tomorrow’s IFO report. The deterioration in growth should lead to weaker business confidence, which should translate into further losses for EUR/USD.

EURGBP – Top in Place?

EURGBP – Top in Place?

Chart Of The Day

After a seemingly endless one way move as post-Brexit blues set in, the EURGBP may be finally putting in a meaningful top at the 8700 level. Despite generally better flash PMI data and despite fresh concerns that Theresa May may trigger article 50 sooner rather than later, the EURGBP pair has come off the highs and now looks to be targeting support.

The move lower despite the generally supportive fundamental background is a clear sign of price exhaustion in the pair and suggests that more profit taking may be in store for the pair. The economic calendar is relatively light for the next few days with only IFO and UK 2nd revision GDP on the docket for the rest of the week, but any surprise in favor of UK could quickly push the EURGBP below the 8500 figure as the unwind continues.

EURAUD – Double Bottom in Place?

EURAUD – Double Bottom in Place?

Chart Of The Day

For the past few weeks the commodity rally helped to fuel a one way move in Aussie that has taken even the staunchest bulls by surprise. But with oil, gold and iron ore prices starting to peter out the Aussie rally may be finally running out of gas.

As the assent of the pair has slowed it’s gains against other majors have slowed as well. A good case in point is EUR/AUD which looks like its starting to put in a double bottom at the key 1.4500 level. Although there is little on the horizon to propel euro higher, the gains in the cross could come just from the correction on the Aussie itself.

The holiday calendar is barren next week, but if the macro factors continue to dominate trade and unwind some of the recent gains of the past few weeks, EUR/AUD could be well on its way to 1.5000 before the month’s end.

USD/JPY – Double Bottom in Place?

USD/JPY – Double Bottom in Place?

Chart Of The Day

USD/JPY has staged a furious rally off yesterday’s lows popping nearly 200 points as it broke the 113.00 barrier in late NY session trade. The return of risk on has helped the pair move higher as it appears to have successfully tested the recent lows and put in a double bottom.

Tomorrow the market will get a slew of US data that could determine if this indeed the near term bottom or simply a pause on the way to a ultimate test of 110.00. With US GDP, PCE and Personal Income and spending data all due at 8:30 NY time the market will get a good idea about the health of the US economy. If growth remains relatively robust sentiment could really start to shift and USD/JPY could push towards key resistance at 114.00

GBP/CAD – Where’s Good Place to Sell?

GBP/CAD – Where’s Good Place to Sell?

Chart Of The Day

GBP/CAD – Where’s Good Place to Sell?

Fundamentally, we believe that the recent decline in GBP/CAD marks a top for the pair. Sterling faces a host of problems in the short and medium term while CAD, which has been hit hard by lower oil prices is nearing a bottom. This morning we learned from the Confederation of British Industry in the U.K. that manufacturing orders fell sharply in the month of January. While this is not a widely followed release, it shouldn’t be ignored as it has a strong correlation with the broader PMI manufacturing report. Export orders fell at a sharp pace in January, which does not bode well for U.K. growth. GDP is the only piece of market moving U.K. data on this week’s calendar and recent reports such as retail sales and trade point to a slowdown in growth. At the same time, last week’s Canadian economic reports were good with retail sales in Canada rising 1.7%. Oil is obviously a problem but $25 should mark a bottom for crude.

So that leaves the question of where is a good place to sell GBP/CAD and that’s where technicals come into play. The currency pair is attempting to break above the 100-day SMA and while that is important, the main resistance is level is 2.04. So the first opportunity to sell would be near 2.04 with a stop above 2.06. The more conservative option would be to sell closer to 2.06 with a stop above 2.08 for a move back to 2.000.

*This is NOT an official Big Trade recommendation but rather an interesting opportunity to watch.

GBP/NZD The Uptrend Remains in Place

GBP/NZD The Uptrend Remains in Place

Chart Of The Day

Cable has been a clear winner over the past few days as the much better than expected wage data and decent Retail Sales have revived talk of a possible BOE hike this year. After today’s dovish FOMC presser that is much less likely -- the BOE is not going to front run the Fed when it comes to normalizing policy, but it nevertheless provides a bid for cable as the unit remains the only viable G-7 currency that could actually tighten policy in the foreseeable future.

In the meantime the kiwi continues to languish and even today’s big anti-dollar rally was quickly extinguished on the back of concerns from chairwoman Yellen that China’s slowdown is a problem. The RBNZ remains resolutely dovish and that means that rates on kiwi could go lower before the year end all of which keeps the GBP/NZD uptrend in place. 2.4000 remains the key support while 2.5000 is the next upside target for the bulls.

AUD/USD – Bottom in Place?

AUD/USD – Bottom in Place?

Chart Of The Day

One of the bigger beneficiaries of today’s anti-dollar rally was the Aussie which soared nearly 200 points on the day. The pair was helped by the more or less neutral RBA which held rates steady for fear of fueling an even bigger housing bubble. As we noted earlier today, although the economy remains sluggish, policy makers are loathe to cut rates further now for fear of stoking a housing bubble and are likely looking for macro prudential rules to take effect before easing monetary policy anymore. The focus will now turn to tonight’s GDP data to see just how weak the AU economy really is. If the data is actually better than anticipated the Aussie could push through .7800 as the night proceeds.

Technically the pair has very sound support at the 7600 level but faces resistance at 8000-8100 corridor providing it with ample room to run just yet.

AUD/JPY – Uptrend in Place?

AUD/JPY – Uptrend in Place?

Chart Of The Day

After staging a strong 700 point rally AUD/JPY has stalled at the 9700 level, but the uptrend may still be in place. While the yen component is clearly dependent on the musings of the FOMC it is becoming increasingly clear that it is simply a question of when not if the Fed will hike rates. Today’s minutes confirm that most policymakers are ready to normalize rates and are just waiting for further signals from the US economy.

The true upside in the pair however, is likely to come from the Aussie side and that is very contingent on Chinese data. That’s why today HSBC PMI report could be key to the near tern direction of the pair. If the data shows that demand in China has stabilized and even began to improve, AUD/JPY is likely to resume its uptrend. If however it shows further contraction the pair could break trendline support and the 9700 figure would mark an swing top for the time being.

Big Trade NZD/JPY – Cancelled

Swing

**Given the sharp fall in dairy prices and upcoming FOMC. We are canceling these orders for now.

Big Trade – Buy NZD/JPY

Place order to Buy 1 Lot NZD/JPY at 88.27

Place order to Buy 1 More Lot at 87.35

Stop 85.70

We like the New Zealand dollar and we like USD/JPY and this combination makes NZD/JPY an extremely attractive trade.

This afternoon the Reserve Bank of New Zealand left interest rates unchanged and told us that they see a prolonged period of interest rate stability. While this is far from the hawkish view that is typically needed to lift a currency, in an environment when investors are worried about who will cut rates next, their steady outlook proved to be extremely positive for NZD. In fact NZD/USD erased all of its earlier losses to end the day in positive territory. RBNZ Governor Wheeler’s belief that inflation will pick up when oil effect passes and that New Zealand is in a different situation than many other countries suggests that they have no intention of moving rates even though they warned that the next move in rates could be up or down -- this guidance should lead to a further recovery in the New Zealand dollar.

Meanwhile we continue to look for a stronger U.S. dollar ahead of next week’s FOMC rate decision. Tomorrow’s consumer spending numbers will most likely reinforce the attractiveness of the greenback as strong non-farm payrolls, rise in gas prices and increase in spending according to Redbook point to a stronger report. The Federal Reserve is gearing up to raise interest rates and regardless of whether it comes in June or September this prospect should continue to be extremely positive for the US dollar. While Fed tightening in 2015 is widely expected a change in forward guidance next week will still lift the dollar and this event risk acts as a target for dollar bulls buying into the news. If retail sales surprised to the upside like we expect, it will harden expectations for a shift in guidance that should send the greenback to fresh multi-year highs against many major currencies going into next week’s monetary policy announcement.

The Chart

NZDJPY031215

Rather than chasing the currency pair, we prefer to buy on a retrace post news. The following 15 minute chart of NZD/JPY shows are buy levels:

Big Trade – Buy NZD/JPY

Place order to Buy 1 Lot NZD/JPY at 88.27

Place order to Buy 1 More Lot at 87.35

Stop 85.70

BK USD/JPY Big Trade Closed for +160

Swing

BK USD/JPY Big Trade Closed for +160

***BK USD/JPY Big Trade Update -- Move stop to 120.18 to lock in +160

BK USD/JPY Big Trade Update -- Move Stop to 119.88 to lock in +130

BK USD/JPY Big Trade Update, Move stop to 119.18 to lock in +60

First Entry Triggered at 118.58

***BK USD/JPY Big Trade Order Adjustments

Place order to Buy 1 Lot USD/JPY at 118.58

Buy 1 more lot at 117.75

Stop 116.80

***BK USD/JPY Big Trade Closed for +80

BK USD/JPY Big Trade Update, Move Stop to 118.70 to lock in +80 pips. Will reload lower if we get stopped out.

BK USD/JPY Big Trade Update -- Move Stop to 118.30 to lock in +40

BK USD/JPY Big Trade Alert -- Time to Buy Again

We are reloading these orders --

The Trade:

USD/JPY Place Order to Buy 1 lot USD/JPY at 117.90

Place Order to Buy 1 Additional lot at 116.75

Stop for ALL 115.35

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.

—--

It is time to Buy USD/JPY.

Negative interest rates in Switzerland and Quantitative Easing by the European Central Bank leaves the market looking for alternative safe havens. The Yen is attractive but from a fundamental perspective not nearly as alluring as the dollar because U.S. economy is actually improving while Japanese growth is struggling. The Fed is one of a select few central banks looking to raise interest rates this year with the chorus growing. Regardless of whether they choose to do so in the summer or fall doesn’t matter -- the key is that they plan to do so period and that along with the loss of the Franc as a safe haven should make the dollar more attractive. In the long run, we are still looking for USD/JPY to revisit its 121.85 December high.

USD/JPY

Place Order to Buy 1 lot USD/JPY at 117.90

Place Order to Buy 1 Additional lot at 116.75

Stop for ALL 115.35