Top 5 – 06.24.13


DATE: Monday June 24, 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

Credit Card Spending expected @ (11 PM ET / 3 GMT)
Our View – Neutral
Reason – Neutral
If Credit Card Spending exceeds 1.0% = Buy NZD/USD
If Credit Card Spending is less than 0.0% = Sell NZD/USD

New Zealand credit card spending numbers are difficult to handicap and not particularly market moving for the NZD unless there is a big surprise. The only opportunity in our opinion then is to trade the data reactively. If credit card spending exceeds 1.0%, we expect the NZD/USD to rise. If spending growth is flat or declines, we expect the NZD/USD to decline. REACTIVE TRADE


7700 holds for now
7800-7900 now key resistance
Break opens test of 7450

The kiwi managed to barely hang on to support at 7700 but a break at that level opens the prospect of a retest of longer term swing lows at 7450.

2. USD/SGD – Singapore Consumer Prices

CPI expected @ 1.5% (1 AM ET / 5 GMT)
Our View – Neutral
Reason – Neutral
If CPI growth is 1% or less = Buy USD/SGD
If CPI growth exceeds 2% = Sell USD/SGD

Singapore’s consumer price report is due for release on Monday and the data is best traded reactively. Inflationary pressures are expected to increase and if economists are right and CPI rises by 2% or more, we expect USD/SGD to sell-off. If CPI growth is less than 1%, we expect USD/SGD to rise. REACTIVE TRADE


1.2800 now next level up
Break puts 1.2850 in view
1.2700 no near term support

The string rally in USD/SGD continues with 1.2800 the next key level to trip which would put the 1.2850 level as target of the longs. Meanwhile 1.2700 now becomes support

3. EUR/USD – German IFO

German IFO expected @ (4 AM ET / 8 GMT)
Our View – Neutral
Reason – Mixed ZEW and PMI
If the German IFO index exceeds 107 = Buy EUR/USD
If the German IFO index drops to 104 or lower = Sell EUR/USD

The German IFO report is a very important and market moving release for the EUR/USD. Unfortunately this month’s release is difficult to handicap because the ZEW survey and PMI index have been mixed. While the expectations component of the ZEW increased, the current conditions component declined. In terms of PMI, service sector activity improved but manufacturing activity slowed. As such the IFO report is best traded reactively. If the German IFO index exceeds 107, the EUR/USD can be bought for a move higher. If the index drops to 104 or lower, the EUR/USD can be sold. REACTIVE TRADE


1.3100 tested
2950-3100 now key long term support
3250 caps the upside

The EUR/USD unwind continued on Friday with 1.3100 now tested. The pair is entering into a key area of long term support with 2950-3100 now acting a key area to hold. Meanwhile upside is capped at 3250.

4. USD/MXN – Unemployment Rate

Unemployment Rate expected @ 5.04% (9 AM ET / 14 GMT)
Our View – Neutral
Reason – Neutral
If Unemployment rate exceeds 6% = Buy USD/MXN
If Unemployment rate is less than 4% = Sell USD/MXN

Labor market numbers are important for every country and Mexico is no exception. While the data is difficult to handicap, if there is a good enough surprise, we expect a meaningful reaction in USD/MXN. The opportunity here is to trade the data reactively. If the unemployment rate exceeds 6%, we expect USD/MXN to rise. If the unemployment rate is less than 4%, we expect USD/MXN to fall. REACTIVE TRADE


Rally continues
13.5000 cap of upside for now
13.000 near term support

The rally in USD/MXN has taken the pair the 13.000 level and 13.5000 now caps the upside with a break there creating the prospect of 14.000 in view.

5. USD/JPY -- Dallas Fed Manufacturing Index

Dallas Fed Manufacturing Index expected @ -0.5% (10 AM ET / 14 GMT)
Our View – Neutral
Reason – Neutral
If the Dallas Fed manufacturing index exceeds 10 = Buy USD/JPY
If the Dallas Fed manufacturing index drops to -15 or lower = Sell USD/JPY

The Dallas Fed manufacturing index is not expected to be a big market mover for the U.S. dollar unless there is a significant surprise. Therefore the data should only be traded reactively. If the index exceeds 10, USD/JPY can be bought for a move higher. If it drops to -15 or lower, USD/JPY can be sold. REACTIVE TRADE


98.00 caps for now
99.00-100.00 are key resistance to the upside
97.00 new near term support

USD/JPY remains bid, but upside momentum has stalled just below 98.00 and even a break there would see stiff resistance to overcome the 99.00-100.00 level. Meanwhile 97.00 is new near term support for now.

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