Top 5 – 04.30.2013

TOP 5 HOT IDEAS

DATE: Tuesday April 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

1. GBP/USD – GfK Consumer Confidence



FUNDAMENTALS
Consumer Confidence expected @ -26 (7:01 PM ET / 23:01 GMT)
Our View – Neutral
Reason – Neutral
If Confidence is -24 or higher = Buy GBP/USD
If Confidence is -27 or lower = Sell GBP/USD

U.K. consumer confidence numbers are scheduled for release this evening and given a large enough surprise, we could see a meaningful impact on the GBP/USD. The data is a tough call however because labor market conditions improved and yet consumer spending has been weak. Therefore the data is probably best traded reactively. If the confidence index rises to -24 or higher, the GBP/USD can be bought for a quick move higher. If the index drops to -27 or lower, the GBP/USD can be sold. REACTIVE TRADE

TECHNICALS

Fails ahead of 1.5550
1.5450 supports
1.5400 is deeper support

After several strong days of up action cable finally ran out of gas at the 1.5550 level but remains in a bullish mode. 1.5450 is first support while 1.5400 breakout level offers stronger support for those looking to buy on dip.

2. USD/JPY – Industrial Production and Retail Trade



FUNDAMENTALS
Industrial Production expected @ 0.4% & Retail Trade expected @ -0.8% (7:50 PM ET / 23:50 GMT)
Our View – Bullish JPY
Reason – Monetary Stimulus and Weak Currency Providing Support for Economy
If Industrial Production is 0% or less & Retail Trade drops by -1.2% or more = Buy USD/JPY
If Industrial Production rises by 0.8% or less & Retail Trade drops by -0.5% or less = Sell USD/JPY

There are a number of Japanese economic reports scheduled for release this evening and we believe that the most important will be industrial production and retail trade. We continue to expect the recent weakness of the Yen and the availability of additional liquidity to provide stimulus for the economy and lead to upside surprises in data. Therefore we believe tonight’s reports can be traded proactively or reactively. For those who choose to wait, if Industrial Production is flat or declines AND Retail Trade drops by -1.2% or more, USD/JPY can be bought for a move higher. If Industrial Production rises by 0.8% or more AND Retail Trade drops by -0.5% or less, USD/JPY can be sold. PROACTIVE or REACTIVE TRADE

TECHNICALS

Longs find value at 97.50
98.50-99.00 still near term resistance
Consolidation continues

USD/JPY continues to consolidate but appears to have found support at 97.50 as the pair rebounded off a test of those level. Still upside is marked by series of resistances at 98.50-99.00 corridor after last week’s sharp sell off correction. For now consolidation dominates.

3. EUR/USD – German Retail Sales and Unemployment

FUNDAMENTALS
German Retail Sales expected @ -0.3% (2AM ET / 6 GMT) & Unemployment Change @ 2K (3:55 AM ET / 7:55 GMT)
Our View – Neutral
Reason – Neutral
If German Retail Sales falls by -0.1% or less AND Unemployment Change is 0K or lower = Buy EUR/USD
If German Retail Sales falls by -0.5% or more AND Unemployment Change rises by 10K or more = Sell EUR/USD

Given the recent deterioration in German data, most people expect tomorrow’s retail sales and unemployment numbers to show further weakness in the Eurozone economy. However, German retail PMI only fell slightly and according to the service and manufacturing sector activity reports, private sector employment was relatively resilient in April. As a result, the data could hold steady or surprise to the upside. Therefore Germany’s retail sales and unemployment numbers are best traded reactively. If German Retail Sales falls by -0.1% or less AND Unemployment Change is 0K or lower, the EUR/USD can be bought for a move higher. If German Retail Sales falls by -0.5% or more AND Unemployment Change rises by 10K or more, the EUR/USD can be sold. REACTIVE TRADE

TECHNICALS

1.3125 caps upside for now
Break of 1.3100 creates upside bias
1.3050 and 1.3000 prime support for now

EUR/USD price action suggest that a modest bullish bias may be building as the pair pierces the 1.3100 level but remains capped by 1.3125 for now. A break above that could lead to a run on 1.3200 while downside support is demarcated by 1.3050 and 1.3000.

4. USD/CAD – February GDP

FUNDAMENTALS
GDP @ 0.2% (8:30 AM ET / 12:30 GMT)
Our View – Bearish CAD
Reason – Weaker Retail Sales and Trade
If GDP growth rises by 0% or less = Buy USD/CAD
If GDP growth rises by 0.5% or more = Sell USD/CAD

We have good reasons to believe that Canadian GDP growth will fall short of expectations. The 2 most important components of GDP are retail sales and trade and in February, the country’s trade deficit widened significantly and retail sales declined, pointing to softer GDP growth. As a result, we believe the data can be traded proactively or reactively. For those who choose to wait, if GDP growth rises by 0% or worse, declines, USD/CAD can be bought for a move back above 1.02. If GDP growth rises by 0.5% or more, USD/CAD can be sold. PROACTIVE or REACTIVE TRADE

TECHNICALS

1.0150 given
1.0100 next in view
1.0250 now resistance to upside.

The loonie rally continues as the slide through the 1.0150 now opens a run towards the 1.0100 level while 1.0205 represent a lower high resistance.

5. USD/JPY – Chicago PMI and Consumer Confidence



FUNDAMENTALS
Chicago PMI expected @ 52.5 (9:45 AM ET / 13:45 GMT) & Confidence expected @ 61 (10 AM ET / 14 GMT)
Our View – Neutral
Reason – Neutral
If Chicago PMI exceeds 54 AND Confidence exceeds 61 = Buy USD/JPY
If Chicago PMI drops below 51.5 AND Confidence is less than 59 = Sell USD/JPY

Two key reports are scheduled for release on Tuesday and the potential for conflicting data means that these releases are probably best traded reactively. A decline in the Philly Fed and Empire State manufacturing survey point to weaker manufacturing activity in the Chicago region but the rise in the IBD index and upward revision to the UMich survey suggests that confidence may have increased last month. If Chicago PMI exceeds 54 AND Confidence exceeds 61, USD/JPY can be bought for a move higher. If Chicago PMI drops below 51.5 AND Confidence is less than 59, USD/JPY can be sold.
REACTIVE TRADE

TECHNICALS

Longs find value at 97.50
98.50-99.00 still near term resistance
Consolidation continues

USD/JPY continues to consolidate but appears to have found support at 97.50 as the pair rebounded off a test of those level. Still upside is marked by series of

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