Top 5 09.20.13

TOP 5 HOT IDEAS

DATE: Friday Sept 20, 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. USD/JPY – Japanese Purchases of Foreign Bonds



FUNDAMENTALS
MoF Data on Japan Buying Foreign Bonds expected @ (7:50 PM ET / 23:50 GMT)
Our View – Neutral
Reason – Neutral
If Purchases exceed 100B = Buy USD/JPY
If Purchases are -100B or lower = Sell USD/JPY

An essential criteria for a resumption of the USD/JPY rally is Japanese purchases of foreign bonds. While this data has become important it is difficult to handicap and therefore we feel the only opportunity to trade this data is reactively. If the recent rise in demand ends, USD/JPY can be sold for a quick move lower. If the nearly 3% U.S. yield finally draws demand from the Japanese, leading to an increase in purchases in excess of 100B, USD/JPY can be bought as investment returns. REACTIVE TRADE

TECHNICALS

99.00 taken out
98.00 strong support
100.00 next in view

The dollar has held up best against the yen and the hold in USD/JPY at 98.00 appears significant as the pair has now recovered all its losses and looks headed to test 100.00 mark again.

2. NZD/USD – Credit Card Spending


FUNDAMENTALS
Credit Card Spending expected @ (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

8400 proves tough resistance
Momentum stalled
8300 now support

The kiwi after rallying so hard for the past few days has finally hit a wall at 8400 as momentum has stalled. 8300 is now support while 8450 is key upside break.

3. GBP/USD – Public Sector Finances and Net Borrowing

FUNDAMENTALS
Public Sector Finances expected @ 5.2B & Public Sector Net Borrowing expected at 11.9B (4:30 AM ET / 8:30 GMT)
Our View – Neutral
Reason – Neutral
If Public Finances & Net Borrowing drops by -10B or more = Buy GBP/USD
If Public Finances & Net Borrowing exceeds 5B = Sell GBP/USD

The U.K’s public sector finances and data on net borrowing are due for release tomorrow. Though these reports can be market moving, they are difficult to handicap and therefore best traded reactively. If Public Finances & Net Borrowing drops by -10B or more, the GBP/USD can be bought for a move higher. If Public Finances & Net Borrowing exceeds 5B, the GBP/USD can be sold. REACTIVE TRADE

TECHNICALS

Big reversal at 6100
6000 now support
6100 now becomes resistance

Cable saw a big resistance off the 1.6100 level today that could now force a test of the 1.6000 support while 1.6100 caps the upside.

4. USD/CAD – Canadian CPI

FUNDAMENTALS
CPI expected @ 0.1% (8:30 AM ET / 12:30 GMT)
Our View – Neutral
Reason – Drop in IVEY Prices but higher raw material prices
If CPI is -0.2% or lower = Buy USD/CAD
If CPI exceeds 0.5% = Sell USD/CAD

Canadian CPI is the most important release on Friday’s calendar. Unfortunately this month’s report is difficult to handicap because prices decreased according to the IVEY PMI but rose according to raw material and industrial product prices. As a result, the data is best traded reactively. If CPI drops by 0.2% or more, USD/CAD can be bought for a move higher. If CPI growth exceeds 0.3%, USD/CAD can be sold. REACTIVE TRADE

TECHNICALS

1.0200 tested
Possible double bottom
1.0350 near term resistance

Loonie saw a sharp spike and rebound off the 1.0200 level suggesting that the pair may have laid in a double bottom for the time being with 1.0350 now near term resistance to the top.

5. EUR/USD – Eurozone Consumer Confidence



FUNDAMENTALS
Eurozone Confidence expected @ -14.5 (10 AM ET / 14 GMT)
Our View – Neutral
Reason – Neutral
If Eurozone Confidence index is less than -10 = Buy EUR/USD
If Eurozone Confidence Index exceeds -20 = Sell EUR/USD

The Eurozone consumer confidence index is not a huge market mover for the euro unless there is a big surprise. Therefore we feel that the data is best traded reactively. If the Eurozone confidence index improves and is less than -10, the EUR/USD can be bought for a move higher. If the Eurozone confidence index exceeds -20, the EUR/USD can be sold for a move lower. REACTIVE TRADE

TECHNICALS

3550 Caps
3450 key support
Consolidates the breakout

Euro is now consolidating its breakout but it must hold the key 3450 level in order to maintain its upside bias.

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