Top 5 – 06.05.2013

TOP 5 HOT IDEAS

DATE: Wednesday June 5, 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. AUD/USD – Q1 GDP



FUNDAMENTALS
Q1 GDP expected @ 0.7% (9:30 AM ET / 1:30 GMT)
Our View – Bullish AUD
Reason – Higher Retail Sales and Trade
If GDP exceeds 0.9% = Buy AUD/USD
If GDP is 0.5% or less = Sell AUD/USD

We have strong reasons to believe that Australian GDP growth will surprise to the upside. The 2 most important components of GDP are retail sales and trade and in the first 3 months of the year, both increased from the fourth quarter. As a result, we feel that this data can be traded proactively or reactively. For those who choose to wait, if GDP growth exceeds 0.9%, the AUD/USD can be bought for another recovery. If GDP is 0.5% or less, the AUD/USD can be sold for a renewed sell-off. PROACTIVE or REACTIVE TRADE

TECHNICALS

9800 Reverses
9600 no key hold
Break of 9600 opens up retest of lows

After yesterday’s breakout today’s reversal in price action looks ominous. 9600 is the key hold level and if broken opens up the possibility of a retest of lows.

2. GBP/USD – UK PMI Services



FUNDAMENTALS
PMI Services expected @ 53.1 (4:30 AM ET / 8:30 GMT)
Our View – Bullish GBP
Reason – Stronger Consumer Confidence and PMI Manufacturing
If the PMI index exceeds 54 = Buy GBP/USD
If the PMI index drops to 51 or lower = Sell GBP/USD

The UK’s PMI Manufacturing index is scheduled for release tomorrow and we believe the data will surprise to the upside. Not only has there been a big improvement in consumer confidence but the manufacturing PMI index also increased. The data can be traded proactively or reactively. For those who choose to wait, if the PMI index exceeds 54, the GBP/USD can be bought. If the index drops to 51 or lower, the GBP/USD can be sold. REACTIVE TRADE

TECHNICALS

5400 continues to cap
5250 still support
5350 next level for longs

Cable continues to consolidate with 1.5250 acting as support while 1.5350 is the next target for longs

3. EUR/USD – Eurozone Retail Sales

FUNDAMENTALS
Eurozone Retail Sales expected @ -0.2% (5 AM ET / 9 GMT)
Our View – Bearish EUR
Reason – Lower German and French Retail Sales
If Eurozone Retail Sales exceeds 0% = Buy EUR/USD
If Eurozone Retail Sales drops by -0.4% or more = Sell EUR/USD

Eurozone Retail Sales numbers are scheduled for release tomorrow and we believe that the data will surprise to the downside. Whenever we look to handicap EZ data, we always turn to reports of the 2 largest economies – Germany and France. Retail sales declined in both countries during the month of April. The data can therefore be traded proactively or reactively. For those who choose to wait, if Eurozone retail sales rise by 0% or more, the EUR/USD can be bought for an extension higher. If retail sales drops by -0.4% or more, the EUR/USD can be sold. PROACTIVE or REACTIVE TRADE

TECHNICALS

1.3050 remains support
1.3110 key to further upside
Slide below 1.3000 turns bias bearish

The euro continues to stall at the 1.3100 level, but 1.3050 still supports while a break below 1.3000 would turn bias bearish.

4. USD/CAD – Canadian Building Permits




FUNDAMENTALS
Building Permits @ -3% (8:30 AM ET / 12:30 GMT)
Our View – Neutral
Reason – Neutral
If Canadian Building Permits grow by -5% or less = Buy USD/CAD
If Canadian Building Permits grow by 1% or more = Sell USD/CAD

Canadian building permits are not a huge market mover for the Canadian dollar unless there is a big surprise. Therefore the data can only be traded reactively. If Building Permits grow by -5% or less, USD/CAD can be bought for a move higher. If Canadian Building Permits grow by 1% or more, USD/CAD can be sold. REACTIVE TRADE

TECHNICALS

Rebound to 1.0350
1.0250 still downside resistance
1.0400 caps upside

As we noted yesterday the move in the loonie was less than impressive and today rebound back to 1.0350 continues to suggest weakness. For now 1.0400 caos and 1.0250 supoorts the pair.

5. USD/JPY – US ISM Non-Manufacturing



FUNDAMENTALS
US ISM Manufacturing expected @ 53.5 (10 AM ET / 14 GMT)
Our View – Neutral
Reason – Neutral
If ISM exceeds 54 = Buy USD/JPY
If ISM drops below 52 = Sell USD/JPY

The US’ ISM non-manufacturing report should be a big market mover for the dollar but with ISM manufacturing falling and consumer confidence soaring, the data is difficult to handicap this much. Therefore it is probably best to wait and traded reactively. If the ISM index exceeds 54, USD/JPY can be bought for a continued recovery. If it drops below 52, USD/JPY can be sold. REACTIVE TRADE

TECHNICALS

100.00 now consolidation
99.00 new support
101.00 new resistance

After yesterday’s decline the pair has fund a new consolidation range with 100 equilibrium while 99.00 supports and 101.00 caps the upside.

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