Top 5 07.18.13

TOP 5 HOT IDEAS

DATE: Thursday July 18, 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 – ANZ Consumer Confidence



FUNDAMENTALS
NZ Confidence expected @ (9 PM ET / 1 GMT)
Our View – Neutral
Reason – Neutral
If Consumer Confidence grows by 3% or more = Buy NZD/USD
If Consumer Confidence contracts by -2% or ore = Sell NZD/USD

New Zealand’s ANZ consumer confidence report is not a huge market mover for the NZD/USD unless there is a big surprise but given the currency’s struggle to recover, this report could have an unusually large impact on the currency. Yet it is still best traded reactively. If consumer confidence grows by 3% or more, the NZD/USD can be bought for a move higher. If confidence contracts by -2% or more, the NZD/USD can be sold REACTIVE TRADE

TECHNICALS

7900 taken out
8000 next in view
7800 near term support

The rebound in kiwi continues with 7900 taken out and 8000 now squarely in view. 7700 supports the downside.

2. EUR/CHF – Switzerland Trade Balance



FUNDAMENTALS
Swiss Trade Balance expected @ 2.15B (2 AM ET / 6 GMT)
Our View – Neutral
Reason – Neutral
If Trade Surplus is less than 1B = Buy EUR/CHF
If Trade Surplus exceeds 3B = Sell EUR/CHF

Switzerland’s trade balance report is difficult to handicap and not incredibly market moving but recently we have been seeing more disappointments than upside surprises in Swiss data. If the trade surplus shrinks to 1B or less, EUR/CHF can be bought for a move higher. If it exceeds 3B or more, EUR/CHF can be sold. REACTIVE TRADE

TECHNICALS

2450 near term top
2300 continues to support
Range persists

EUR/CHF has failed to take out 1.2500 with 1.2459 forming the near term top for the pair as 1.2300 acts as support for now.

3. EUR/USD – Eurozone Current Account Balance

FUNDAMENTALS
EZ Current Account Balance expected @ (4 AM ET / 8 GMT)
Our View – Bearish EUR
Reason – Smaller German Current Account Surplus, Larger French CA Deficit
If EZ Current Account Balance exceeds 25B = Buy EUR/USD
If EZ Current Account Balance is less than 15B = Sell EUR/USD

We have good reasons to believe that the Eurozone’s current account surplus shrank in the month of May. Whenever we look to handicap EZ data we always turn to the reports of its 2 largest economies – Germany and France. In May Germany reported a smaller current account surplus and France reported a larger current account deficit. As such we feel that the data can be traded proactively or reactively. For those who choose to wait, if the EZ current account balance exceeds 25B, the EUR/USD can be bought for a move higher. If the current account balance is less than 15B, the EUR/USD can be sold. PROACTIVE or REACTIVE TRADE

TECHNICALS

3200 still caps
3000 remains support
Range continues

The euro is now trapped in a 3200-3000 range as the upside still caps the move. A break there could open the run towards 3400.

4. GBP/USD – UK Retail Sales

FUNDAMENTALS
Retail Sales expected @ 0.3% (4:30 AM ET / 8:30 GMT)
Our View – Bearish GBP
Reason – Decline in Shop Prices, Drop in BRC Retail Sales but Improvement in Labor Market
If Retail Sales grow by 1.5% or more = Buy GBP/USD
If Retail Sales contract by 0.5% or more = Sell GBP/CAD

We have good reasons to believe that U.K. retail sales decrease last month because shop prices declined and spending fell according to a similar report conducted by the British Retail Consortium. However the labor market saw significant improvements and confidence improved. We feel that the data can be traded proactively or reactively. For those who choose to wait, if retail sales grow by 1.5% or more, the GBP/USD can be bought for a recovery trade. However if retail sales contract by 0.5% or more, the GBP/USD can be sold. PROACTIVE or REACTIVE TRADE

TECHNICALS

5200 taken out
5000 supports
5300 next target of longs

5200 was taken out as pound recovery continues. 5000 now acts as support while a break above 5200 opens the run towards 5300.

5. USD/JPY – Philadelphia Fed Survey



FUNDAMENTALS
Philly Fed Survey expected @ 8 (10 AM ET / 14 GMT)
Our View – Bullish USD
Reason – Stronger Empire State Survey
If the Philly Fed index rises to 15 or higher = Buy USD/JPY
If the Philly Fed index falls to 4 or lower = Sell USD/JPY

We have good reasons to believe that the Philly Fed survey will be stronger because of a similar increase in the Empire state survey, which is a measure of manufacturing conditions in the NY region. As such, we feel that the Philly Fed survey can be traded proactively or reactively. For those who choose to wait, if the Philly Fed index rises to 15 or higher, USD/JPY can be bought for an extension higher. If the Philly Fed index falls to 4 or lower, USD/JPY can be sold. PROACTIVE or REACTIVE TRADE

TECHNICALS

99.00 supports
100.00 break opens the upside
Break below 98.00 turns bias negative

USD/JPY continues to be supported at the 99.00 level and a move through 100.00 would open a broader bullish move towards the highs of the year.

*Top 5 Archive Members Only Top 5

Leave a Comment

Your email address will not be published. Required fields are marked *