Top 5 11.15.12

DATE: Nov 15, 2012

1. USD/SGD – Strength Expected in Retail Sales


FUNDAMENTALS
Retail Sales expected @ 1.4% (12AM ET / 5GMT)
Our View – Bullish SGD
Reason – Decline in Unemployment Rate
If retail sales is less than 0.5% = Buy USD/SGD
If retail sales exceeds 2% = Sell USD/SGD

We have good reasons to believe that retail sales in Singapore increased in the month of September. Like many countries in Asia, Singapore relies heavily on Chinese demand and the recent improvement in Chinese data should boost business and consumer confidence. More importantly though, the unemployment rate in Singapore dropped to a 6 month low in September as job growth increased in the service and manufacturing sector. A healthier labor market should contribute positively to retail sales. This data can be traded proactively or reactively and month over month sales growth in excess of 2% will be very good for the Singapore dollar. PROACTIVE or REACTIVE TRADE

TECHNICALS
Range conditions persist
1.2200 remains support
1.2260 caps upside

Range conditions dominate trade in USD/SGD and the momentum in the pair remains flat but a series of lower highs suggest that a downside bias is developing

SENTIMENT
Risk turns ugly as day proceeds Dow -1.45% Europe -0.81% Nikkei 0.04% Oil 86.50 +1 Gold 1727 +2

2. EUR/USD – Will EZ Recession Return?

FUNDAMENTALS
German GDP expected @ 0.1% (2AM ET / 7GMT) & ECB GDP expected @ -0.1% (5AM ET / 9GMT)
Our View – Neutral
Reason – Neutral
If GE GDP exceeds 0.3% = Buy EUR/USD
If GE GDP is 0% or less = Sell EUR/USD

We have good reasons to believe that German GDP growth could surprise to the upside. The market is looking for slower German GDP growth but with retail sales and trade activity ticking higher in the third quarter, GDP growth in the EZ’s largest economy should be at bare minimum positive and possibly stronger than the market expected. However Eurozone GDP may not be so good due to weaker growth in other parts of the region. There is a very good chance that the Eurozone returned to recession in the third quarter. German and Eurozone GDP is best traded reactively. If German GDP exceeds 0.3%, the EUR/USD should rally but if it is less than 0%, the EUR/USD should fall. REACTIVE TRADE

TECHNICALS
A hold above 1.2700 suggests a base in place
2770 caps the upside
Break higher could open way to 1.2800

The price structure in EURUSD has improved somewhat as the recent 1.2660 low held and the pair was able to trade above 1.2700 for most of the day. Upside momentum is expanding but 1.2270 caps for now through a break opens way for 1.2800

SENTIMENT
Risk turns ugly as day proceeds Dow -1.45% Europe -0.81% Nikkei 0.04% Oil 86.50 +1 Gold 1727 +2

3. GBP/USD – Consumer Spending May Weaken

FUNDAMENTALS
UK Retail Sales expected @ -0.1% (4:30AM ET / 9:30GMT)
Our View – Bearish GBP
Reason – Decline in confidence and BRC retail sales
If UK Retail Sales exceeds 1.0% = Buy GBP/USD
If UK Retail Sales is less than -0.3% = Sell GBP/USD

We have strong reasons to believe that U.K. consumer spending weakened in the month of October because the British Retail Consortium reported a 0.1% decline in retail sales and a drop in consumer confidence. According to GfK, consumer sentiment fell to a 6 month low last month as Britons grew more concerned about their finances and spending. Employment also deteriorated last month with jobless claims increasing. We believe there is an opportunity to trade this report proactively or reactively. If retail sales grow by 1% or more, the GBP/USD could enjoy a relief rally but if grows by 0.3% or less, then the GBP/USD will be in trouble. PROACTIVE or REACTIVE TRADE

TECHNICALS
Downside pressure persists
5850 broken opens way 5800
No support yet seen

The price action in GBPUSD remains highly negative as series of lower highs pressures the pair downward. With 1.5850 broken 1.5800 is next target of shorts with little relief in sight.

SENTIMENT
Risk turns ugly as day proceeds Dow -1.45% Europe -0.81% Nikkei 0.04% Oil 86.50 +1 Gold 1727 +2

4. USD/JPY – Employment (Jobless Claims) is Still Key



FUNDAMENTALS
Jobless Claims expected @ 375k (8:30AM ET / 13:30GMT)
Our View – Neutral
Reason – Neutral
If Jobless Claims is less than 355k = Buy USD/JPY
If Jobless Claims is greater than 375k = Sell USD/JPY

A number of U.S. economic reports will be released on Thursday including consumer prices, the Empire State manufacturing survey, jobless claims and the Philadelphia Fed index. Of these reports, we believe that jobless claims will be the most market moving because the labor market is the Federal Reserve’s primary focus. Inflation is muted – so its not a major threat and the manufacturing sector is not expected to deteriorate enough to affect the Fed’s plans for monetary policy. There’s a potential for an abnormally out of line jobless claims report because of Superstorm Sandy. Jobless claims are difficult to predict but if it falls to 355k or less, USD/JPY should rally. However if it exceeds 375k, we could see a steeper slide in USD/JPY. REACTIVE TRADE

TECHNICALS
Big breakout on 80.00
80.50 next key barrier
Momentum turns strongly positive

USDJPY finally staged a breakout above 80.00 and momentum has now turned strongly positive but the pair needs to clear the 80.50 barrier which has served a multiple point of resistance.

SENTIMENT
Risk turns ugly as day proceeds Dow -1.45% Europe -0.81% Nikkei 0.04% Oil 86.50 +1 Gold 1727 +2

5. USD/CAD – Existing Home Sales

FUNDAMENTALS
Existing Home Sales expected @ (9AM ET / 14 GMT)
Our View – Neutral
Reason – Neutral
If Existing home sales is less than 1.0% = Buy USD/CAD
If Existing Home Sales exceeds 3.5% = Sell USD/CAD

Existing home sales is not a significantly market moving piece of data for the Canadian dollar unless there is a big surprise. Recent reports from the housing market have been mixed with house prices increasing but housing starts declining. The economy as a whole has taken a turn for the worse but we don’t expect much from existing home sales. Nonetheless if sales rise by 3.5% or more, USD/CAD should weaken. Alternatively if it grows by 1% or less, USD/CAD may rally. Existing home sales for Canada is only tradable reactively and if there is a meaningful surprise. REACTIVE TRADE

TECHNICALS
A critical level of 1.0035
Break of 1.0050 points to 1.0100
Parity supports

USDCAD is once again testing the 1.0035 level which has been triple resistance is the past few days. A break through that barrier opens way for runt o 1.0050 and 1.0100 while parity now acts as support.

SENTIMENT
Risk turns ugly as day proceeds Dow -1.45% Europe -0.81% Nikkei 0.04% Oil 86.50 +1 Gold 1727 +2

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