Top 5 09.09.13

TOP 5 HOT IDEAS

DATE: Monday Sept 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 – Chinese Trade Balance



FUNDAMENTALS
China Trade Balance expected @ 20.0B, Exports expected @ 5.5% (TBD)
Our View – Neutral
Reason -- Neutral
If exports grow by 13% or more = Buy NZD/USD
If exports grow by 7% or less = Sell NZD/USD

Chinese trade numbers are scheduled for release this evening and as usual, we can expect the report to have a meaningful impact on the commodity currencies. For the sake of variety, we will take a look at how the trade data can impact the NZD. First the data will be released over the weekend when markets are closed so it can only be traded reactively and second, the primary focus of the trade report is exports. If exports grow by 7% or more, the NZD/USD can be bought for a move higher. However if export growth slows to 4% or less, the NZD/USD can be sold. REACTIVE TRADE

TECHNICALS

8000 next in view
8100 key upside resistance
7900 now support

Although the kiwi has posted yet another strong upside day but it now faces upside resistance at the key 8100 level which will be considerably harder to overcome.

2. USD/JPY – Japanese Q2 GDP Revisions

FUNDAMENTALS
Q2 GDP Revisions expected @ 1% (7:50 PM ET / 23:50 GMT)
Our View – Neutral
Reason – Neutral
If GDP is revised down to 0.5% or lower = Buy USD/JPY
If GDP is revised up to 1.2% or higher = Sell USD/JPY

Revisions to Q2 GDP are expected from Japan Sunday evening and while we don’t usually trade revisions, in this case, the market is looking for a sharp upward revision. Changes to previous reports are difficult to estimate and therefore best traded reactively. If Japanese GDP is revised down to 0.5% or lower, USD/JPY can be bought for a move higher. If GDP is revised up to 1.2% or higher, USD/JPY can be sold. REACTIVE TRADE

TECHNICALS

100.00 fails again
98.50 holds for now
A break lower would suggest test of 97.00

USD/JPY failed yet again at the 100.00 level and unless it can retake that figure a drift lower would suggest a retest of 97.00 mark.

3. AUD/USD – Australian Home Loans

FUNDAMENTALS
Home Loans expected @ 2% (9:30PM ET / 1:30 GMT)
Our View – Neutral
Reason – Neutral
If Home Loans exceed 5% = Buy AUD/USD
If Home Loans declines = Sell AUD/USD

Australia’s home loans report is not a huge market mover for the AUD/USD unless there is a big surprise. Therefore Sunday’s Australian economic report is best traded reactively. If home loans exceed 5%, we expect the AUD/USD to rise. If it falls by any amount, we expect the AUD/USD to weaken in response. REACTIVE TRADE

TECHNICALS

9200 tested
9300 key upside break
9000 now strong support

The Aussie continues to show relative strength and a move through the 9300 level could open the way for a run towards 9500. Meanwhile 9000 remains near term support

4. EUR/CHF – Switzerland Unemployment

FUNDAMENTALS
Swiss Unemployment expected @ 3% (1:45 AM ET / 5:45 GMT)
Our View – Neutral
Reason – Neutral
If Switzerland’s unemployment rate is 3.2% or higher = Buy EUR/CHF
If Switzerland’s unemployment rate is 2.9% or less = Sell EUR/CHF

No major changes are expected in Switzerland’s unemployment rate which means the data is best traded reactively. If Switzerland’s unemployment rate increases to 3.2% or higher EUR/CHF can be bought for a move higher. If the unemployment rate drops below 3%, EUR/CHF can be sold. REACTIVE TRADE

TECHNICALS

2400 rejected
2250 support
A break higher opens run to 2500

EUR/CHF held the 2250 support well and has rallied but the momentum has stalled at the 2400 level and the pair may chop in range for time being. A break above 2400 would open a move towards 2500.

5. USD/CAD – Canadian Building Permits



FUNDAMENTALS
Building Permits @ 2.5% (8:30 AM ET / 12:30 GMT)
Our View – Neutral
Reason – Neutral
If Canadian Building Permits fall by -10% or more = Buy USD/CAD
If Canadian Building Permits rise by 4% or less = 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 should only be traded reactively. If Building Permits fall by 10% or more, USD/CAD can be bought for an extension higher. If Canadian Building Permits rise by 4% or less, USD/CAD can be sold. REACTIVE TRADE

TECHNICALS

Big move 1.0400
1.0350 next target of shorts
1.0500 now resistance

USD/CAD has made a strong move towards the 1.0400 level but further progress may stall as the pair faces stiffer support at 1.0350.

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