Top 5 – 05.09.2013

TOP 5 HOT IDEAS

DATE: Thursday May 9, 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 – NZ Employment Change



FUNDAMENTALS
Employment Change expected @ 0.8% (6:45PM ET / 20:45)
Our View – Neutral
Reason -- Neutral
If employment change rises by 1.2% or more = Buy NZD/USD
If employment change rises by 0.2% or less = Sell NZD/USD

New Zealand’s labor market report is due for release in a few hours and could be a big market mover for the NZD. However with the Manpower index reporting weaker labor market conditions but job ads increasing, this month’s release is difficult to handicap. Therefore the data is best traded reactively. If employment rises by 1.2% or more, NZD/USD can be bought for a move higher. However if employment change rises by 0.2% or less, the NZD/USD can be sold. REACTIVE TRADE

TECHNICALS


8360 key support
8500 now resistance
Break of 8360 opens run to 8200

The kiwi has had a major turnaround over the past few days with bias now clearly pointing to the downside. 8360 is key support which if broken opens a run to 8200 while 8500 caps the upside

2. AUD/USD – AU Employment



FUNDAMENTALS
AU Employment expected @ 11K (9:30 PM ET / 1:30 GMT)
Our View – Bearish AUD
Reason – Drop in employment component of manufacturing, service and construction PMI
If Employment Change rises by 20K or more = Buy AUD/USD
If Employment Change rises by 5K or less = Sell AUD/USD

We have strong reasons to believe that Australian job growth last month will fail to live up to expectations. According to all 3 of the PMI reports (construction, manufacturing and services), labor market conditions deteriorated in the month of April. As a result, we believe the data can be traded proactively or reactively. For those who choose to wait, if employment increases by 20K or more, the AUD/USD can be bought for a recovery trade. If employment change rises by 5K or less, the AUD/USD can be sold. PROACTIVE or REACTIVE TRADE

TECHNICALS

1.0150 holds for now
1.0225 major resistance
Break opens run to 1.0100

The EUR/CHF breakout above 1.2300 was turned back, but the pair remains supported at the 1.2250 level and the small upside bias is still in place.

3. USD/JPY – Japanese Leading Index

FUNDAMENTALS
Leading Index expected @ 97.7 (1 AM ET / 5 GMT)
Our View – Neutral
Reason – Neutral
If the leading index drops to 96 or lower = Buy USD/JPY
If the leading index rises to 99 or higher = Sell USD/JPY

Japanese leading indicators are not a huge market mover for the Yen unless there is a big surprise. As a result, the data is best traded reactively. If the leading index drops to 96 or lower, we expect USD/JPY to rally. If the index rises to 99 or higher, USD/JPY can be sold. REACTIVE TRADE

TECHNICALS

99.00 now looks chunky
98.50 still holds
Possible lower top

USD/JPY is now having problems with the 99.00 level and the slowdown may be troubling for the bulls especially if pair starts to slip towards 98.50 which would indicate yet another short term top. For now 98.50 still supports but a break would signal end to this upleg.

4. GBP/USD – U.K. Industrial Production


FUNDAMENTALS
Industrial Production expected @ 0.2% (4:30 AM ET / 8:30 GMT)
Our View – Bullish GBP
Reason – Higher PMI and uptick in new and export orders
If Industrial Production rises by 0.6% or more = Buy GBP/USD
If Industrial Production declines = Sell GBP/USD

While the Bank of England’s monetary policy announcement is scheduled for release tomorrow, we expect U.K. industrial production numbers to have a more significant impact on the GBP because the BoE is widely expected to leave rates unchanged. Based on the uptick in PMI manufacturing and more specifically the rise in new orders and export orders, we have good reasons to believe that industrial production will rise more than anticipated. Therefore the data can be traded proactively or reactively. For those who choose to wait, if industrial production rises by 0.6% or more, the GBP/USD can be bought for a move higher. If industrial production declines, the GBP/USD can be sold. PROACTIVE or REACTIVE TRADE

TECHNICALS

Back through 5550
5600 still caps upside
5450 still supports downside

Cable revived today retaking the 1.5550 level but the rally ran out of gas at just below 1.5600 which continues to cap the upside for now. Downside support at 1.5450 remains in place.

5. USD/JPY – Jobless Claims



FUNDAMENTALS
Jobless Claims @ 335K (8:30 AM ET / 12:30 GMT)
Our View – Neutral
Reason – Neutral
If jobless claims rise by 325K or less = Buy USD/JPY
If jobless claims rise by 350K or more = Sell USD/JPY

Since the most important U.S. release this week is jobless claims, it should have some impact on the dollar. However the data is difficult to predict and therefore best traded reactively. If jobless claims rise by 325K or less, USD/JPY can be bought for a move higher. If jobless claims rise by 350K or more, USD/JPY can be sold. PROACTIVE or REACTIVE TRADE

TECHNICALS

99.00 now looks chunky
98.50 still holds
Possible lower top

USD/JPY is now having problems with the 99.00 level and the slowdown may be troubling for the bulls especially if pair starts to slip towards 98.50 which would indicate yet another short term top. For now 98.50 still supports but a break would signal end to this upleg.

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