Top 5 – 08.09.2013

TOP 5 HOT IDEAS

DATE: Friday August 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 – New Zealand Credit Card Spending



FUNDAMENTALS
Credit Card Spending expected @ 0.5% (6:45PM ET / 20:45)
Our View – Neutral
Reason -- Neutral
If Credit Card Spending rises by 1% or more = Buy NZD/USD
If Credit Card Spending falls by -1% or more = Sell NZD/USD

New Zealand credit card spending is not a huge market mover for the NZD/USD unless there is a big surprise. Therefore the data is best traded reactively. If credit card spending rises by 1% or more, the NZD/USD can be bought for a move higher. If credit card spending falls by 1% or more, the NZD/USD can be sold. REACTIVE TRADE

TECHNICALS

8000 taken out
Strong rebound continues
8100 much tougher resistance

The kiwi continued to rebound strongly for the fourth day in row retaking the 8000 level but 8100 figure which has stiffer resistance may be a much tougher target to broach.

2. USD/JPY – Japanese Consumer Confidence

FUNDAMENTALS
Consumer Confidence expected @ 45 (1AM ET / 5 GMT)
Our View – Neutral
Reason – Neutral
If Confidence is less than 42 = Buy USD/JPY
If Confidence exceeds 47 = Sell USD/JPY

Japanese consumer confidence numbers are scheduled for release this evening and we do not expect the report to have a significant impact on the Yen unless there is a big surprise. Therefore the data is best traded reactively. If confidence is less than 42, USD/JPY can be bought for a move higher. If confidence exceeds 47, USD/JPY can be sold. REACTIVE TRADE

TECHNICALS

96.00 tested and held
97.00 now resistance
Downdraft slows

USD/JPY may have made a near term low with its climax test of the 96.00 level and the decent short covering bounce off that level. 97.00 caps for now as it tries to form a bottom.

3. AUD/USD – Chinese Industrial Production


FUNDAMENTALS
Chinese Industrial Production expected @ 8.9% (1:30 AM ET / 5:30 GMT)
Our View – Bullish AUD
Reason – Sharp Rise in Imports
If Industrial Production exceeds 9.1% = Buy AUD/USD
If Industrial Production growth is less than 8.7% = Sell AUD/USD

A handful of Chinese economic reports are scheduled for release tomorrow but we feel that industrial production will be the most important because it is a reflection of Chinese economic activity and internal demand. The sharp rise in imports in particular point to increased domestic activity which suggests that industrial production could surprise to upside. Therefore we feel that the data can be traded proactively or reactively. For those who choose to wait, if Chinese industrial production exceeds 9.1%, the AUD/USD can be bought for a move higher. If industrial production growth is less than 8.7%, the AUD/USD can be sold for a potential move lower. PROACTIVE or REACTIVE TRADE

TECHNICALS

9000 and 9100 cleared
9200 now next test for longs
9000 new support

The strong turnaround in the Aussie that pushed it all the way to 9100 level suggests that the short covering rally is gathering steam and the pair could challenge the 9200 level next.

4. GBP/USD – UK Trade Balance

FUNDAMENTALS
UK Trade Balance expected @ -8.35B (4:30 AM ET / 8:30 GMT)
Our View – Bullish GBP
Reason – Strong PMI Manufacturing and Industrial Production
If Trade Deficit is -7.5B or better = Buy GBP/USD
If Trade Deficit is -10B or higher = Sell GBP/USD

We have strong reasons to believe that the U.K. trade deficit narrowed in the month of June. Manufacturing activity continued to improve and industrial production ticked higher which are all a reflection of stronger economic activity. Therefore we feel that the UK trade balance can be traded proactively or reactively. For those who choose to wait, if the Trade Deficit is -7.5B or better, the GBP/USD can be bought for a move higher. If the trade deficit is -10B or larger, the GBP/USD can be sold. PROACTIVE or REACTIVE TRADE

TECHNICALS

5550 taken out
5600 may prove tougher
5450 now support

Cable’ furious assent continued today with 5500 and 5550 giving way, but the pair stalled at the 5600 level and may now see some pause as it consolidates its gains.

5. USD/CAD – Canadian Employment



FUNDAMENTALS
Canadian Employment expected @ 10K (8:30 AM ET / 12:30 GMT)
Our View – Bullish CAD
Reason – Employment component of IVEY PMI Increased
If Employment is less than 5K = Buy USD/CAD
If Employment exceeds 20K = Sell USD/CAD

We have good reasons to believe that Canadian employment numbers could surprise to the upside. While the IVEY PMI index declined in the month of July, the employment component of the report rose, pointing to the possibility of job growth. Therefore we feel the data can be traded proactively or reactively. For those who choose to wait, if Canadian employment rises by 5K or less, USD/CAD can be bought for a resumption of the uptrend. However if Canadian employment exceeds 20K, USD/CAD can be sold. PROACTIVE or REACTIVE TRADE

TECHNICALS

Big reversal off 1.0400
1.0300 next level
1.0250 is key support

USD/CAD put in a big reversal off the 1.0400 level and is now gunning for the 1.0300 figure with 1.0250 still very strong support as the pair now heads to the bottom of the recent range

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