Top 5 12.10.13

TOP 5 HOT IDEAS

DATE: Tuesday Dec 10, 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. AUD/USD – NAB Business Confidence



FUNDAMENTALS
NAB Business Confidence expected @ (7:30PM ET / 00:30 GMT)
Our View – Neutral
Reason -- Neutral
If Business Confidence index exceeds 8 = Buy AUD/USD
If Business Confidence Index is 2 or lower = Sell AUD/USD

With the recent unevenness of Australian data and the uncertain outlook for AUD, any piece of data can have a meaningful impact on the currency. Unfortunately the business confidence report is difficult to handicap and therefore difficult to trade reactively. If the business confidence index exceeds 8, we expect the AUD/USD to rally. If the index drops to 2 or lower, we expect the AUD/USD to slide. REACTIVE TRADE

TECHNICALS

9100 continues to test
9150 next level
Bottom in place at 9000

Aussie continues to recover with 9000 now solid support. 9100 is taken out again as the pair continues to eye 9150.

2. NZD/USD – Chinese Industrial Production

FUNDAMENTALS
Chinese Industrial Production expected @ 10.1% (12:30 AM ET / 5:30 GMT)
Our View – Bullish NZD
Reason – Drop in Chinese Imports
If Industrial production grows by 10.5% or more = Buy NZD/USD
If Industrial Production grows by 10.1% or less = Sell NZD/USD

The drop in Chinese imports points to a potential slowdown in industrial production activity. As such, we feel tonight’s report can be traded proactively or reactively. For those who choose to wait, if industrial production grows by 10.5% or more the NZD/USD can be bought for a move higher. If Chinese industrial production growth slows to 10.1% or less, the NZD/USD can be sold. PROACTIVE or REACTIVE TRADE

TECHNICALS

8400 key resistance
8300 near term support
8200 deeper support

8400 remains a key double top resistance for the kiwi and the pair will have a difficult time clearing through that level. Meanwhile 8300 is near term support.

3. USD/JPY – Japanese Consumer Confidence

FUNDAMENTALS
Consumer Confidence expected @ 43.5 (12AM ET / 5 GMT)
Our View – Neutral
Reason – Neutral
If Confidence is less than 40 = Buy USD/JPY
If Confidence exceeds 45 = Sell USD/JPY

Japanese consumer confidence numbers are scheduled for release this evening and we do not expect the report to have a significant impact on the Yen unless there is a big surprise so the data is best traded reactively. If the confidence index drops to 40 or lower, USD/JPY can be bought for a move higher. If the confidence index exceeds 45, USD/JPY can be sold. REACTIVE TRADE

TECHNICALS

Again stalls at 103.30
103.50 key to upside break
102.50 supports

USD/JPY has once again stalled at the 103.30 level but if it can break through 103.50 it will open the way to a fresh yearly highs.

4. USD/TRL – Turkish GDP

FUNDAMENTALS
Q3 YoY GDP expected @ 4.2% (3 AM ET / 8 GMT)
Our View – Neutral
Reason – Slightly Weaker trade and confidence
If GDP Growth Is less than 4.2% = Buy USD/TRL
If GDP Growth exceeds 4.5% = Sell USD/TRL

Turkey’s third quarter GDP numbers will be released on Tuesday and economists are looking for a slowdown in GDP growth. Since the country does not release consumer spending figures, the data is difficult to predict but we know that the trade balance improved and confidence increased which raises doubt about the consensus forecast. As such, we believe the data is best traded reactively. If annualized GDP growth is less than 4.2%, we expect USD/TRL to rally. If annualized GDP growth exceeds 4.5%, we expect USD/TRL to weaken. REACTIVE TRADE

TECHNICALS

2.0000 supports
2.5000 caps
Range persists

USD/TRY remains in tight 2.0000-2.5000 range with slight downside bias

5. GBP/USD – UK Industrial Production

FUNDAMENTALS
UK Industrial Production expected @ 0.4% (4:30 AM ET / 9:30 GMT)
Our View – Bullish GBP
Reason – Higher PMI index along with new orders and new export orders
If Industrial Production growth exceeds 1% = Buy GBP/USD
If Industrial production growth is less than 0.4% = Sell GBP/USD

We have strong reasons to believe that U.K. industrial production activity increased at a faster pace in October. Manufacturing activity increased according to the latest PMI report with a specific improvement in new orders and new export orders. However the forecasts are high and may be difficult to beat. Nonetheless we still feel that UK IP can be traded proactively or reactively. For those who choose to wait, if industrial production grows by 1% or more, the GBP/USD can be bought for a move higher. If industrial production grows by 0.4% or less, the GBP/USD can be sold. PROACTIVE or REACTIVE TRADE

TECHNICALS

6440 in view
6300 supports
Break opens run to 6500

Cable continues to probe higher as it tries to target the yearly highs at 1.6440 with a break there opening up a run to 1.6500.

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