Top 5 – 03.22.13

*Top 5 Archive Members Only


DATE: Friday, March 22, 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 – New Zealand Job Ads

New Zealand Jobs Ads expected @ (5 PM ET / 21 GMT)
Our View – Neutral
Reason – Neutral

New Zealand’s job ads have already been released and therefore can only be traded reactively. The data was good with job ads rising 1% compared to an upwardly revised decline of only -0.6% in the previous month. NZD/USD rallied slightly on the news and should remain supported throughout the Asian trading session but there’s no a major trading opportunity here. NO TRADE


Power move through 8300
8250 new support
8350 next target of longs

The kiwi finally powered through the 8300 level and the bias now turns firmly bullish with 8250 as support while next target of longs is 8350.

2. AUD/USD – Australian Leading Indicators

Flash Manufacturing PMI @ (7 PM ET / 23 GMT)
Our View – Neutral
Reason – Neutral
If Leading Indicators rise by 0.1% or more = Buy AUD/USD
If Leading Indicators fall by 0.3% or greater = Sell AUD/USD

Australian leading indicators are due for release this evening and while the data isn’t a huge market mover for the AUD/USD, it can be if there is a large enough surprise. The data should therefore only be traded reactively. If leading indicators rise by 0.1% or more, we expect AUD/USD to rally. If leading indicators fall by 0.3% or more, we expect the AUD/USD to slide. REACTIVE TRADE


1.0400 cleared
1.0500 next resistance
1.0350 now strong support

The Aussie as we’ve noted yesterday needed to clear the 1.0415 level and the run through that area has taken the pair to 1.0450. Next area of resistance is 1.0500 while 1.0350 becomes string support.

3. EUR/USD – German IFO Report

German IFO expected @ 107.8 (5 AM ET / 9 GMT)
Our View – Bearish EUR
Reason – Higher ZEW, lower PMIs, Industrial Production and Factory Orders
If IFO exceeds 108.5 = Buy EUR/USD
If IFO is less than 106.5 = Sell EUR/USD

We have good reasons to believe that the German IFO report will surprise to the downside. While investor confidence improved according to the ZEW, this morning’s PMI numbers were a big disappointment with manufacturing and service sector activity slowing significantly. Industrial Production and Factory orders also declined, pointing to a weaker German IFO. As a result, we believe that the data can be traded proactively or reactively. For those who choose to wait, if the IFO report exceeds 108.5, we expect the EUR/USD to rally. If the IFO report drops to 106.5, we expect the EUR/USD to weaken. PROACTIVE or REACTIVE TRADE


1.2850 still holds
1.2950 caps upside for now
Break of 1.2850 opens 1.2800

EUR/USD remains stubbornly resilient as the pair continues to hold the 1.2850 support level but the upside remains capped at 1.2950 while a break below 1.2850 would open a run towards 1.2800

4. USD/TRY – Turkish Industrial Confidence

Industrial Confidence expected @ (8:30 AM ET / 12:30 GMT)
Our View – Neutral
Reason – Neutral
If Industrial Confidence drops to 106 or lower = Buy USD/TRY
If Industrial Confidence exceeds 109 = Sell USD/TRY

Turkey’s Industrial Confidence report is scheduled for release tomorrow and if there is a large enough surprise, we could see a reaction in USD/TRY. The data should only be traded reactively. If Industrial Confidence drops to 106 or lower, USD/TRY should rally. If Industrial Confidence exceeds 109, USD/TRY should weaken. REACTIVE TRADE


1.8200 chunky resistance
1.7900 support
Break above 1.8300 opens path to 1.8500

USD/TRY has run into chunky resistance at 1.8300. Support lies at 1.7900 while a break above 1.8300 opens 1.8500

5. USD/MXN – Mexico’s Unemployment Rate

Unemployment Rate expected @ 5.27% (10 AM ET / 14 GMT)
Our View – Neutral
Reason – Neutral
If Unemployment Rate rises to 5.6% or higher = Buy USD/MXN
If Unemployment Rate Drops to 5.10% or lower = Sell USD/MXN

Unemployment numbers are important for every country and Mexico is no exception. However the data is difficult to handicap and should therefore only be traded reactively. If Unemployment Rate rises to 5.6% or higher, we expect USD/MXN to rally. If Unemployment Rate Drops to 5.10% or lower, we expect USD/MXN to slide. REACTIVE TRADETECHNICALS

Possible bottom at 12.30
Resistance at 12.55
Break below 12.30 opens 12.00

USD/MXN looks to have paused it downward descent as 12.30 serves as near term bottom for now. 12.50 is key resistance overhead while a break of 12.30 opens way for a test of 12.00

S&P up 0.67%, Gold down 0.4%, 10 year bond yields up 5.8bp