Top 5 09.11.13


DATE: Wednesday Sept 11, 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


CGPI expected @ 0.4% (7:50 PM ET / 23:50 GMT)
Our View – Neutral
Reason – Neutral
If CGPI drops by -0.1% or more = Buy USD/JPY
If CGPI exceeds 0.7% = Sell USD/JPY

Japan’s Domestic Goods Price Index is not a big market mover for the Yen unless there is a big surprise. CGPI is a measure of inflation so if CGPI drops by -0.1% or more, it could boost USD/JPY. If it exceeds 0.7%, USD/JPY could slip as stronger inflation eases the pressure on the BoJ to ease. CGPI should only be traded reactively. REACTIVE TRADE


100.00 breakout holds
99.50 now support
100.50 next target of longs

USD/JPY has fully reversed last week’s losses and is now closed above the 100.00 mark creating a upward bias in the pair. Next target of longs is 100.50 while 99.50 now becomes support

2. AUD/USD – Westpac Consumer Confidence

Consumer Confidence expected @ (8:30PM ET / 0:30 GMT)
Our View – Neutral
Reason – Neutral
If Confidence rises by 4% or more = Buy AUD/USD
If Confidence rises by less than 2% or more = Sell AUD/USD

Australian consumer confidence is due for release tonight and while it is a difficult release to handicap, it can be an important report for the AUD/USD. Given the improvement in business confidence and uptick in Chinese economic activity, the odds favor a softer release. However our confidence is not high because data remains weak and we feel that the event risk is best traded reactively. If confidence rises by 4% or more, we expect the AUD/USD to rally. If it rises by less than 2%, we expect the AUD/USD to fall. REACTIVE TRADE


9300 cleared
9200 now support
9350 break opens run to 9500

The AUD/USD recovery remains on track and the move through the 9300 level suggests that a possible stronger breakout is in play. A move above 9350 opens a test of teh key 9500 level.

3. EUR/USD – German Final CPI

German CPI expected @ 0.0% (2 AM ET / 4 GMT)
Our View – Neutral
Reason – Neutral
If CPI is revised to 0.5% or higher = Buy EUR/USD
If CPI is revised to -0.3% or lower = Sell EUR/USD

Revisions to German CPI are not expected to have a significant impact on the euro unless there is a sudden change in inflationary pressures. As such, we believe the data is best traded reactively. If CPI growth is revised to 0.5% or higher we expect the EUR/USD to rally. If CPI is revised to -0.3% or lower, we expect the EUR/USD to weaken. REACTIVE TRADE


Consolidation day
3280 still caps
3200 remains support

The EUR/USD consolidated today with 3280 still capping upside action. A break there opens a test of 3320 while 3200 is near term support.

4. GBP/USD – UK Jobless Claims

Jobless Claims Change expected @ -21K (4:30 AM ET / 8:30 GMT)
Our View – Bullish GBP
Reason – Stronger Job Growth in Manufacturing, Marginal Job Growth in Services
If Jobless Claims Drop by 35K or more = Buy GBP/USD
If Jobless Claims Drop by 15K or more = Sell GBP/USD

We have good reasons to believe that U.K. labor market conditions improved last month because the manufacturing and construction sector saw stronger job growth while the construction sector saw marginal improvement. As a result, we believe that UK Employment numbers can be traded proactively or reactively. For those who choose to wait, if jobless claims drop by 35K or more, the GBP/USD can be bought for a continued move higher. If claims drop by 15K or less, the GBP/USD can be sold. PROACTIVE or REACTIVE TRADE


5750 still key resistance
Break opens a move towards 5900
5600 now support

Cable had another good day and is now inching towards the key 1.5750 resistance point. If cleared then we may have a possible move towards the 1.5900 area.

5. NZD/USD – RBNZ Rate Decision

RBNZ Rate Decision expected @ 2.5% (5 PM ET / 22 GMT)
Our View – Neutral
Reason – Neutral
If RBNZ stays mum on the currency = Buy NZD/USD
If RBNZ warns about further intervention = Sell NZD/USD

The Reserve Bank is not expected to change interest rates but their comments about their outlook for the economy and views about the New Zealand dollar could have a significant impact on the currency. When we last heard from the central bank, the RBNZ expressed concerns about the high level of the NZD and while the currency has remained strong since then, there have also been improvements in Australian and China’s economy. If the RBNZ sounds dovish and expresses continued to concern about the NZD, the currency could give up its gains. If they sound more optimistic, the NZD/USD could extend its rally. REACTIVE TRADE


8100 next target of longs
8000 near term support
8150 stiff resistance

The kiwi continues to climb higher with 8000 now support, but the 8150 level representing a stiff resistance point that could result in a double top.

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