Today’s Day Trades 11.22.2017 – USDJPY, CADCHF, CHFJPY

Swing

*Good morning/afternoon everyone!*

The minutes from the most recent FOMC meeting are due for release today and the U.S. dollar is trading lower across the board despite the prospect of hawkish rhetoric. U.S. yields are also up which should be supportive of the greenback but the mighty buck decoupled from rates after Fed Chair Janet Yellen warned against tightening too quickly in her speech last night. Jobless claims, durable goods orders and revisions to the latest University of Michigan Sentiment index are also due for release but the main event will be the FOMC minutes and U.K. Chancellor Hammond’s Autumn budget. Sterling could be sensitive to the latest economic forecasts from OBR and any significant announcements made by the Chancellor. The euro is holding its ground above 1.17, AUD and NZD are attempting to bottom but the moves look fleeting. USD/CAD is below the 20-day SMA, signaling the possibility of further losses.

*The MAIN THEMES I see today are*

-EUR
-GBP
+USD
-JPY
+CAD

*Trading Biases*

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

*Today’s Initial Trades*

1. Buy CADCHF at .7759, Stop .7731, Target .7787
2. Buy CHFJPY at 113.36, Stop at 113.08, Target 113.64
3. Buy USDJPY at market 112.06, Stop 111.78, Target 112.34

Close ALL open day trades by 10:20AM NY / 15:20 GMT

USDJPY Back to 112.00?

USDJPY Back to 112.00?

Chart Of The Day

Despite rising equity markets, steady yields, positive economic data and the prospect of a Fed rate hike in December USDJPY has done nothing but slide lower over the past few weeks. What gives?

The problem for the pair is that the market remains skeptical about any further rate hikes in 2018. For now, the Fed funds futures curve is decidedly flat for 2018, with most traders concerned that the Fed will remain on the sidelines far into 2018 amidst the absence of any inflationary pressures.

A few weeks ago we noted that USDJPY has decoupled from many of its correlations including those with bonds and equities. That generally suggests further trouble for the currency as traders ignore the past beneficial relationships and only focus on possible risks. Tomorrow the market will get a glimpse of FOMC minutes which could send the pair lower if they do not offer an unambiguously hawkish message. For now, the 111.50 support remains key -- but a break there could usher in a tidal wave of selling all the way to 110.00

USDJPY – How Far Will it Fall?

USDJPY – How Far Will it Fall?

Chart Of The Day

USDJPY – How Far Will it Fall?

Over the past few weeks, the U.S. dollar has struggled despite progress on tax reform and the prospect of a Federal Reserve rate hike next month. The market may be convinced that the Federal Reserve will raise interest rates in December, but the most recent economic reports have been far from encouraging. At the same time, while the House voted to pass its tax bill this past week, the Senate is where the real battle will take place. The full Senate is not expected to vote on the bill until after the Thanksgiving holiday so there may be little reason for investors to be long dollars during the holiday week. Last minute changes that tie in the Affordable Care Act and make individual tax cuts temporary (corporate tax cuts permanent) have not been received well by Democrats and even some Republicans. The GOP cannot afford to lose more than 2 votes. They have only a 52-48 majority in the Senate and no Democrats are willing to support the bill. Also, the Senate and House still have to reconcile their bills before they are combined into a final plan that is voted on by both houses of Congress. So it will still be a long road ahead before President Trump signs tax reform into law. With the Senate going on recess, we probably won’t get any meaningful progress in the week ahead and that could contain the volatility in the greenback. Aside from the FOMC minutes, which should be dollar positive, there are no major U.S. economic reports scheduled for release.

Technically USDJPY has a lot of support between 111.70 (the 100-day and 200-day SMA cross) and 111.90, the 38.2% Fibonacci retracement of the September to November rally. A move down to that level could be all that we see next week but if this support level is broken, the next stop could be 111.00.

USDJPY – 113.00 is Key Support

USDJPY – 113.00 is Key Support

Chart Of The Day

USDJPY has been under pressure for the past several weeks, having failed to take out the 115.00 figure on multiple occasions. Furthermore, the pair is failing at its key correlation with 10-year bonds not rallying when yields go up and falling when they decline. That’s a warning light for dollar bulls as a breakdown in correlation often presages a decline in price.

Tommorrow the market will get a look at two key data points -- CPI and US Retail Sales. Both numbers are expected to be worse than the month prior. However, if they actually miss their forecast and turn negative, USDJPY will likely test the key support at the 113.00 level and a break there could lead to a much sharper selloff towards 110.00 as investors will begin to fear that US growth may have peaked.

For now, USDJPY remains in a tenuous uptrend, but it must hold the 113.00 level otherwise it will have formed a very ugly quadruple top and may drift all the way to 110.00 by year-end.

Today’s Trades 11.14.2017 – USDJPY, GBPCHF, CADCHF

Swing

*Good morning/afternoon everyone!*

The euro is trading sharply higher this morning against all of the major currencies on the back of a stronger than expected German GDP growth. ECB President Draghi didnt say anything damaging to the currency, allowing EUR/USD to take out 1.17 easily. While we are super bullish euros the move has taken EUR/USD to the 100-day SMA and the pair is struggling to extend its gains beyond that level. By the same token, sterling is underperforming because of soft CPI numbers but EUR/GBP is also at the 100-day SMA, which is a natural place of resistance. The U.S. dollar is taking a backseat today but 10 year yields are back below 2.4% and that is weighing on the currency. This morning’s US PPI report isn’t expected to have a significant impact on the currency. The Canadian and Australian dollars appear poised for a recovery while the New Zealand dollar extended its losses for a 4th consecutive trading day.

*The MAIN THEMES I see today are*

+EUR
-USD
-GBP
+CHF
+AUD
+CAD
-NZD

*Trading Biases*

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

*Today’s Ideas*

1. Sell USDJPY at market now 113.67, Stop 113.95, Target 113.39
2. Sell GBPCHF at market now 1.3046, Stop at 1.3074, Target 1.3018
3. Sell CADCHF at market now .7814, Stop at .7842, Target .7786

Close ALL open day trades by 10:20AM NY / 15:20 GMT

Today’s Trades 11.13.2017 – USDJPY, EURGBP, NZDCHF

Swing

*Good morning/afternoon everyone!*

All of the major currencies are trading lower this morning including USD/JPY which makes risk aversion the main driver of currency flows. With U.S., German and U.KL yields pointing lower, we could see continued weakness in the North American session. 10 year Treasury yields continue to reject 2.4% despite the increased confidence that Congress will agree on a tax plan. Instead USD/JPY is taking its cue from U.S. rates and Japanese stocks which fell for the 4th straight trading session. The biggest loser is GBP which has fallen sharply on Brexit concerns. This is a big week for GBP with UK CPI, retail sales and labor data scheduled for release. EUR on the other hand is quiet while the comm dollars remain under pressure.

*The MAIN THEMES I see today are*

-USD
-GBP
-NZD
+JPY

*Trading Biases*

-USD, -GBP, -NZD
+JPY, +CHF,
Mildly -AUD
neutral CAD, EUR

*Today’s Ideas*

1. Sell USDJPY at market now 113.34, Stop at 113.62, Target 113.06
2. Buy EURGBP at .8899, Stop .8871, Target .8927
2. Sell EURJPY at 132.05, Stop at 132.33, Target 131.77
4. Sell NZDCHF at .6871, Stop at .6899, Target .6842

Close ALL open day trades by 10:20AM NY / 15:20 GMT

USDJPY – Can it Break 115.00?

USDJPY – Can it Break 115.00?

Chart Of The Day

USDJPY made an impressive reversal today rising above the 114.00 level in morning NY trade. The pair is being seesawed by US political news as market try to absorb the impact of new tax reform proposals. For now, it’s not clear if the tax legislation will indeed be stimulatory to the economy, but market’s focus will turn to tomorrow’s NFP and wage data.

The forecast is for a very large rebound in jobs after a hurricane leaden September. However, analysts may be overestimating the rebound and the market could be setting itself for disappointment. Although US data has been generally strong there is little indication that job growth surged this month.

The miss could take USDJPY once again below the 113.00 level and set up a triple top in the pair as the 115.00 level once again proves to be a cement ceiling. If however, it breaks the 115.00 level USDJPY could be on the way to a new uptrend.

USD/JPY to 115?

USD/JPY to 115?

Chart Of The Day

USD/JPY to 115?

Tomorrow we have the Federal Reserve’s second to last monetary policy announcement of the year and while no changes are expected, they are widely expected to set the stage for a year-end rate hike. The U.S. dollar is trading firmly against most of the major currencies ahead of this key event and if the Fed is sufficiently hawkish, we will see USD/JPY above 114 and possibly even near 115. Fed fund futures show the market pricing in 0% chance of tightening in November and 85% chance of a hike in December. Therefore the Fed needs to be unambiguously hawkish in order to avoid a sell-off in the dollar. If anyone dissents and favors an immediate tightening, the dollar will rise with USD/JPY taking aim at 115 if there are 2 or more dissents. There has been widespread improvements in the U.S. economy since the last Fed meeting and with the progress being made on tax reform and stocks hovering at or near record highs, there’s plenty of reasons to justify a hike. Consumer spending and consumer confidence is up, average hourly earnings increased significantly in September, inflation increased with improvements seen in manufacturing and service sector activity.

For all of these reasons we believe that the dollar will rise into and on the back of the FOMC rate decision. Unlike last month’s meeting when a press conference followed the rate decision this time we only have the FOMC statement. But that can still be enough to excite dollar bulls. We’re looking for a move up to 114.50 on the back of FOMC but if there are a number of hawkish dissents, we may even see the pair break 115. There’s no question that investors are bullish dollars ahead of this event so in the unlikely chance that the Fed raises fresh concerns, giving investors reason to believe that next month’s hike will be a dovish one, USD/JPY will fall quickly and aggressively and the unwind could take the pair as low as 112 in the hours to follow.

Technically, USDJPY bounced off the 20-day SMA yesterday and with the 50-day and 100-day crossing upwards, a move to the triple top near 114.50 appears likely. There’s pretty stiff support right above 112 as that’s where we have the 200-week SMA and the 50% Fibonacci retracement of the 1998 to 2011 decline.

Today’s Trades 10.24.2017 – AUDNZD, EURJPY, USDJPY

Swing

*Good morning/afternoon everyone!*

There is very little consistency in the performance of the U.S. dollar this morning but US yields are up across the board. 10 year Treasuries are knocking on the 2.4% door but similarly large moves in 10 year UK Gilt and German Bund yields have prevented EUR and GBP from experiencing any meaningful losses. Eurozone PMIs were mixed, adding to the concerns that the ECB may offer a dovish taper on Thursday. The Canadian dollar is trading slightly lower ahead of tomorrow’s rate decision. The big moves all came overnight when NZD plunged on the back of the new government’s agenda. USD/JPY also staged a dramatic recovery after crashing down to113.25 during the Asian trading session on very little news. Looking ahead, the US’ Markit PMI reports are scheduled for release today but investors will be focused on the move in yields and any updates on President Trumps’ Fed pick. He’s said he will make a decision very very soon -- the debate for many is that it will be Powell vs. Taylor or a combo of both.

*The MAIN THEMES I see today are*

+USD
-AUD
-NZD
-CAD
-GBP
-EUR

*Trading Biases*

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

*Today’s Ideas*

1. Buy AUDNZD at 1.1236, Stop at 1.1206, Target 1.1256
2. Buy EURJPY at 133.73, Stop at 133.43, Target 133.93
3. Buy USDJPY at 113.73, Stop at 113.43, Target 113.93

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

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.

Is USDJPY Rolling Over?

Is USDJPY Rolling Over?

Chart Of The Day

Although US fundamentals remain firmly positive, USDJPY has failed to respond to the data, rejecting the 113.00 level and falling through the 112.00 figure in morning US dealing today. Aside from the usual geopolitical tensions between the US and North Korea, there seems to be something greater that is worrying the market and when there is a discrepancy between price action and news flow, it always pays to take notice.

The weakness in USDJPY may suggest that the markets are no longer convinced that a Fed rate hike is a done deal in December. Tomorrow’s FOMC minutes will reveal just how committed US policymakers are to a tightening regime. The market expects general hawkish consensus, but if the minutes show a wide array of opinions, with many FOMC members still undecided, then the buck could suffer more selling and test long-term support at the 111.50 level.

Where to Buy USDJPY

Where to Buy USDJPY

Chart Of The Day

Where to Buy USDJPY

The U.S. economy lost 40k jobs in the month of September but instead of falling, the greenback enjoyed strong broad based gains this past week. USD/JPY broke above 113 and hit its highest level in nearly 3 months. It gave up those gains on reports that North Korea could conduct a missile test this weekend but the fundamentals supporting the greenback have not changed. U.S. data was better than expected and Federal Reserve officials still plan to raise interest rates. While the impact of the hurricanes on payrolls was more significant than economists anticipated (they were looking for 80K job growth but instead saw -33K job losses), investors quickly discounted the headline number in favor of the upward revision in August, the strong 0.5% rise in average hourly earnings and the lowest unemployment rate since 2001. While the dollar retreated from its highs on reports that North Korea could test missiles this weekend, there’s no refuting the strength of Friday’s jobs report. These better than expected numbers reinforce the Fed’s hawkishness and helped drive up expectations for a year-end rate hike to 77% from 70% one week prior. Just like in 2005 after Hurricane Katrina, everyone is looking for payrolls to be revised higher and rebound next month. With manufacturing and service sector activity accelerating and wage growth rising, we expect the dollar to extend its gains in the coming week. The FOMC minutes scheduled for release on Wednesday should be hawkish and with gas prices rising and wage growth increasing, economists are also looking for a very sharp recovery in retail sales that should take USD/JPY back to its highs near 113.50.

Technically however we have to respect the reversal in USD/JPY. Friday’s candle was an ugly one that typically points to a deeper correction ahead. The only “good news” is that we’re still seeing higher highs and higher lows but at this point, we believe that its best to wait for USD/JPY to dip to the 200-day SMA near 112.