Top 5 – 04.22.13

TOP 5 HOT IDEAS

DATE: Friday April 19, 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. NZD/USD – New Zealand Credit Card Spending



FUNDAMENTALS
New Zealand Credit Card Spending expected @ (11 PM ET / 3 GMT)
Our View – Neutral
Reason – Neutral
If credit card spending rises by 5% or more = Buy NZD/USD
If credit card spending rises by 1% or less = Sell NZ/USD

While New Zealand’s credit card spending numbers are an important indication of consumer demand, the data is not a big market mover for the NZD/USD unless there is a meaningful surprise. Therefore we believe the data should only be traded reactively. If credit card spending rises by 5% or more, the NZD/USD can be bought for a move higher. However if credit card spending rises by 1% or less, the NZD/USD can be sold. REACTIVE TRADE

TECHNICALS

Back towards the test of .8400
.8500 caps
Break of .8375 opens new down leg

The kiwi failed badly at the .8500 level and the turn down now threatens a test of the .8400 support level. A break there with a move through .8375 would open a fresh down leg in the pair.

2. USD/DKK – Denmark Retail Sales



FUNDAMENTALS
Retail Sales expected @ (3 AM ET / 7 GMT)
Our View – Neutral
Reason – Neutral
If Retail Sales growth is less 0% = Buy USD/DKK
If Retail Sales growth exceed 0.8% or more = Sell USD/DKK

Retail sales is one of the most important economic reports that a country can release and Denmark is no exception. However the data is difficult to handicap and since the Danish Krone is not an actively traded currency it is best traded reactively. If retail sales contracts, USD/DKK can be bought for a move higher. If retail sales growth exceeds 0.8%, USD/DKK can be sold. REACTIVE TRADE

TECHNICALS

Clears through 5.7000
5.6700 supports
Break higher opens up a run to 5.7500

USD/DKK found a clear value support at 5.6700 level and the recovery through 5.7000 now opens up the run to 5.7500.

3. USD/MXN – Mexico Retail Sales

FUNDAMENTALS
Retail Sales expected @ 0.9% (9 AM ET / 13 GMT)
Our View – Bearish MXN
Reason – Lower Consumer Confidence
If Retail Sales grow by less than 0.5% = Buy USD/MXN
If Retail Sales exceed 2% = Sell USD/MXN

We have good reasons to believe that retail sales growth slowed in Mexico. Consumer confidence declined and labor market conditions have not improved by much. As a result, the data can be traded proactively or reactively. If retail sales grow by less than 0.5%, USD/MXN can be bought for a move higher. If retail sales growth exceeds 2%, we expect to see a nice sell-off in USD/MXN. REACTIVE TRADE

TECHNICALS

Resistance at 12.30
12.10 supports
Lower high suggests move lower

USD/MXD rally is looking like it is running out of steam at the 12.30 level and the lower high suggests a possible turn to the down side where 12.10 offers support.

4. EUR/USD – EZ Consumer Confidence


FUNDAMENTALS
Consumer Confidence expected @ -23.9 (10 AM ET / 14 GMT)
Our View – Neutral
Reason – Neutral
If Consumer Confidence index rises to -20 or higher = Buy EUR/USD
If Consumer Confidence index drops to -25 or lower = Sell EUR/USD

We have good reasons to believe that Eurozone consumer confidence weakened in the month of April because of all of the problems in the region, the pullback in the DAX and the decline in the ZEW. However this 10am ET report is not a big market mover for the EUR unless there is a sizeable surprise. As a result, we believe the data should only be traded reactively. If the consumer confidence index rises to -20 or better, the EUR/USD can be bought for a move higher. If it drops to -25 or lower, it can be sold for a further move lower. REACTIVE TRADE

TECHNICALS

1.3000 holds
Failure at 1.3100 suggests more downside
Break of 1.3000 opens 1.2950.

The EUR/USD continues to struggle with the upside and the failure at the 1.3100 level suggests a possible turn lower with 1.3000 still the key support.

5. USD/JPY – U.S. Existing Home Sales



FUNDAMENTALS

Existing Home Sales expected @ 0.5% (10 AM ET / 14 GMT)
Our View – Neutral
Reason – Neutral
If Existing Home Sales rise by 1.5% or more = Buy USD/JPY
If Existing Home Sales is flat or declines, = Sell USD/JPY

With no major economic reports scheduled for release on Monday, U.S. existing home sales could have a larger than usual impact on USD/JPY. Unfortunately its one of the first housing market reports and therefore difficult to handicap, so best traded reactively. If existing home sales rises by 1.5% or more, USD/JPY can be bought for a quick move higher. If Existing Home Sales is flat or declines, USD/JPY can be sold REACTIVE TRADE

TECHNICALS

Break above 99.50
Back in 99.50-100.00 corridor
99.00 supports while 100.00 in view

The power move in USD/JPY into the 99.50-100.00 corridor now sets up yet another run at the century mark while 99.00 is the near term support.

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