Top 5 – 11.06.13

TOP 5 HOT IDEAS

DATE: Wednesday Nov 6, 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 – Employment Report



FUNDAMENTALS
Q3 Employment expected @ 0.5% (4:45 PM ET / 21:45 GMT)
Our View – Bullish NZD
Reason – Stronger NZD Employment
Data has already been released, positive for NZD/USD

By now New Zealand employment numbers have already been released and the data was strong. The level of employment rose by a whopping 1.2% compared to a forecast of only 0.5%. The NZD soared in reaction but we think there will be continuation. Therefore we feel that NZD can be bought as a reactive trade against the USD, or AUD. *Trading forex carries risk REACTIVE TRADE

TECHNICALS

8350 next target for longs
8300 support
8200 deeper support

The kiwi continues to perform well with 8350 the next target of longs. For now 8300 is immediate support while 8200 is deeper support for the pair.

2. AUD/USD – Australian Trade Balance

FUNDAMENTALS
Trade Balance expected @ -500M (7:30 PM ET / 00:30 GMT)
Our View – Bullish AUD
Reason – Rise in Manufacturing PMI, increase new and export orders
If Trade deficit is -300M or better = Buy AUD/USD
If Trade deficit is -900M or larger= Sell AUD/USD

We have good reasons to believe that Australia’s trade deficit improved in the month of September because manufacturing PMI increased and more specifically new orders and export orders rose. As a result, we feel that tonight’s report can be traded proactively or reactively. For those who choose to wait, if the Trade deficit is -300M or better, we believe the AUD/USD can be bought for an extension higher. If the Trade surplus is -900M or larger, the AUD/USD can be sold. PROACTIVE or REACTIVE TRADE

TECHNICALS

9500 retaken
9450 key support holds
9550 next target for longs

The Aussie continues to hold support at 9450 and now tries to climb towards 9550 as it tries to make a V bottom after a week of selling off.

3. GBP/USD – UK Industrial Production

FUNDAMENTALS
Industrial Production @ 0.6% (4:30 AM ET / 9:30 GMT)
Our View – Bearish GBP
Reason – PMDrop in PMI Manufacturing
If Industrial Production rises by 0.8% or more = Buy GBP/USD
If Industrial Production rises by 0.3% or less = Sell GBP/USD

UK industrial production is scheduled for release tomorrow. We have good reasons to believe that the data will surprise to the downside because manufacturing activity deteriorated according to the latest PMI numbers. This data can therefore be traded proactively or reactively. For those who choose to wait, if industrial production rises by 0.8% or more, the GBP/USD should rally. However if industrial production rises by 0.3% or less, the currency pair can be sold for a move lower. PROACTIVE or REACTIVE TRADE

TECHNICALS

1.6050 taken out
1.6000 now support
1.6100 next target for longs

Cable is performing well with 1.6100 now in view as 1.6000 is now near term support while 1.5900 is deeper support for pair.

4. EUR/USD – Eurozone Retail Sales

FUNDAMENTALS
Eurozone Retail Sales expected @ -0.4% (5 AM ET / 10 GMT)
Our View – Bearish EUR
Reason – Weaker German and French Retail Sales
If Retail Sales exceed 0.1% = Buy EUR/USD
If Retail sales declines by -0.8% more more = Sell EUR/USD

Eurozone Retail Sales numbers are scheduled for release tomorrow and we believe that the data will surprise to the downside. Whenever we look to handicap EZ data, we always turn to reports of the 2 largest economies – Germany and France. Retail sales declined in both countries during the month of September, which is why we feel the data can be traded proactively or reactively. For those who choose to wait, if Eurozone retail sales rise by 0.1% or more, the EUR/USD can be bought for an extension higher. If retail sales declines by 0.8% or more, the EUR/USD can be sold. PROACTIVE or REACTIVE TRADE

TECHNICALS

3500 caps
3450 holds as long term support
Consolidation continues

The EUR/USD found support at the long term level of 3450 and is now consolidating at 3500, but a break below could open a move towards 3400 and possibly 3350.

5. USD/CAD – IVEY PMI Index

FUNDAMENTALS
IVEY PMI expected @ 51 (10 AM ET / 15 GMT)
Our View – Bearish CAD
Reason – Weaker retail sales, trade and employment
If the PMI index drops below 51 = Buy USD/CAD
If the PMI index exceeds 53 = Sell USD/CAD

We have good reasons to believe that Canadian manufacturing conditions deteriorated in the month of October. The economy in general has been seeing more downside with retail sales, trade and employment weakening. The Bank of Canada even dropped its call to raise rates recently. As such, we feel that the data can be traded proactively or reactively. For those who choose to wait, if the PMI index drops below 51, USD/CAD can be bought for a move higher. If it exceeds 53, USD/CAD can be sold. PROACTIVE or REACTIVE TRADE

TECHNICALS

1.0400 now support
1.0500 next target of longs
Consolidation continues

Consolidation continues for loonie with 1,0400 the near term support and 1.0500 the next target for longs as upward bias remains in place.

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