Top 5 12.13.13

TOP 5 HOT IDEAS

DATE: Friday Dec 13, 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 – ANZ Consumer Confidence



FUNDAMENTALS
NZ Confidence expected @ (7 PM ET / 0 GMT)
Our View – Neutral
Reason – Neutral
If Consumer Confidence grows by 7% or more = Buy NZD/USD
If Consumer Confidence grows by 2% or less = Sell NZD/USD

New Zealand’s ANZ consumer confidence report is not a huge market mover for the NZD/USD unless there is a big surprise but given the RBNZ’s hawkishness, this report could have a larger than usual impact on the currency. It is best traded reactively. If consumer confidence grows by 7% or more, the NZD/USD can be bought for a move higher. If confidence grows by 2% or less, the NZD/USD can be sold REACTIVE TRADE

TECHNICALS

8200 holds
8400 still caps
Higher lows remains

Kiwi maintains its uptrend as higher lows stay in place with 8200 support and 8400 resistance as key range points.

2. USD/JPY – Japanese Industrial Production (Final)

FUNDAMENTALS
Industrial Production expected @ (11:30 PM ET / 4:30 GMT)
Our View – Neutral
Reason – Neutral
If Industrial Production is revised down to 0.3% or lower = Buy USD/JPY
If Industrial Production is revised up to 0.8% or more = Sell USD/JPY

The industrial production report is important to Japan because it is an activity index that can provide clues on how the economy will perform going forward. Unfortunately as these are final figures, so no revisions are expected. This means the data is best traded reactively. If industrial production is revised down to 0.3% or lower, USD/JPY can be bought for a move higher. If industrial production is revised up to 0.8% or higher, USD/JPY can be sold. REACTIVE TRADE

TECHNICALS

102.30 recovered
Yearly highs in view
104.00 next target of longs

USD/JPY saw a strong recovery to recapture the 103.30 level and now stands ready to challenge the yearly highs at 103.63. 104.00 next major target of longs

3. EUR/CHF – Swiss Producer Prices

FUNDAMENTALS
Swiss PPI expected @ 0.1% (3:15 AM ET / 8:15 GMT)
Our View – Neutral
Reason – Neutral
If PPI growth falls by -0.2% or more = Buy EUR/CHF
If PPI growth rises by 0.5% or more = Sell EUR/CHF

Swiss producer prices are not a huge market mover for the Swiss Franc unless there is a meaningful surprise. As a result, we believe this data can only be traded reactively. If PPI growth falls by -0.2% or more, EUR/CHF can be bought for a quick trade higher. If PPI growth rises by 0.5% or more, EUR/CHF can be sold. REACTIVE TRADE

TECHNICALS

2200 support holds
Possible double bottom
Break opens run to 2100

The downward pressure on EUR/CHF finally came to a small halt at 2200 as the pair tries to establish a double bottom but a break could open a run to 2100.

4. EUR/USD – Eurozone Q3 Employment

FUNDAMENTALS
Q3 Employment expected @ (5 AM ET / 10 GMT)
Our View – Neutral
Reason – Neutral
If Q2 Employment rises by 0.5% or more = Buy EUR/USD
If Q2 Employment drops by -0.7% or more = Sell EUR/USD

The Eurozone’s quarterly employment report is not a huge market mover for the EUR/USD unless there is a big surprise. The data should therefore only be traded reactively in our opinion. If Q3 Employment rises by 0.5% or more, the EUR/USD can be bought for a move higher. If employment drops by -0.7% or more, the EUR/USD can be sold. REACTIVE TRADE

TECHNICALS

3800 rejected
3700 now support
Break of 3830 opens run to 3900

The euro was rejected off the 3800 level and now 3700 comes into view as a key test of support.

5. USD/JPY – US Producer Prices


FUNDAMENTALS
PPI expected @ 0.0% (8:30 AM ET / 13:30 GMT)
Our View – Neutral
Reason – Import price growth declines by -0.6%, same as prev month
If PPI grows by 0.1% or more = Buy USD/JPY
If PPI contracts by -0.8% or more = Sell USD/JPY

The U.S. producer price report is not a major market mover for the dollar unless there is a significant surprise. Given that import prices dropped by the same amount as the previous month, the report is difficult to handicap. As a result, we feel that PPI should only be traded reactively. For those who choose to wait, if PPI growth exceeds 0.1%, USD/JPY can be bought for a move higher. If it contracts by -0.8% or more, USD/JPY can be sold. REACTIVE TRADE

TECHNICALS

102.30 recovered
Yearly highs in view
104.00 next target of longs

USD/JPY saw a strong recovery to recapture the 103.30 level and now stands ready to challenge the yearly highs at 103.63. 104.00 next major target of longs

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