TOP 5 HOT IDEAS

DATE: Wednesday April 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. NZD/USD – Credit Card Spending

FUNDAMENTALS
Credit Card Spending @ 0.3% (6:45 PM ET / 22:45 GMT)
Our View – Neutral
Reason – Neutral
If Credit Card Spending exceeds 0.8% = Buy NZD/USD
If Credit Card spending is flat or declines = Sell NZD/USD

New Zealand credit card numbers are due for release this evening and if the data is strong enough, we expect new year to date highs in the NZD/USD. Unfortunately the data can only be traded reactively because if the surprise is not large enough, there may not be a reaction in the NZD/USD. Therefore if credit spending growth matches last months rise of 0.8% or better, we expect the NZD/USD to extend higher. If credit card spending is flat or declines, we expect the NZD/USD to weaken. REACTIVE TRADE

TECHNICALS

8500 taken out
8550 next target for longs
8450 now supports

The kiwi has powered through the psychologically key 8500 level and is now on track to target the 8533 highs from late Feb. The run through the highs opens a test of 8550 while 8450 supports any retrace.

2. AUD/USD Consumer Confidence

FUNDAMENTALS
Consumer Confidence expected @ (8:30 PM ET / 00:30 GMT)
Our View – Bullish AUD
Reason – Stronger Business Confidence, Labor Conditions
If Consumer Confidence rises by 3% or more = Buy AUD/USD
If Consumer Confidence rises by 0.5% or less = Sell AUD/USD

Australian consumer confidence numbers are due for release this evening and we have good reasons to believe that the data will surprise to the upside. The latest labor market report showed a significant improvement in job growth and last night, we learned that business confidence increased as well. Therefore we believe that the data can be traded proactively or reactively. For those who choose to wait, if the consumer confidence index rises by 3% or more, we expect the AUD/USD to rally. If consumer confidence rises by 0.5% or less, we expect the AUD/USD to weaken. PROACTIVE or REACTIVE TRADE

TECHNICALS

1.0500 cleared
1.0550 next target of longs
1.0450 most immediate support

The Aussie finally cleared the 1.0500 level but it will likely need to extend the move through 1.0515 to generate momentum for a run at 1.0550 as the power move in comm dollars continues.

3. AUD/USD – Chinese Trade Balance

FUNDAMENTALS
Chinese Trade Balance expected @ 15.15B (10 PM ET / 2 GMT)
Our View – Neutral
Reason – Neutral
If Trade Surplus exceeds $16B = Buy AUD/USD
If Trade Surplus is less than $14.5B = Sell AUD/USD

It won’t take much surprise in tonight’s Chinese trade numbers for there to be a reaction in the AUD/USD. However when it comes to Chinese data, it is always better to trade the report reactively than proactively because Chinese economic numbers are difficult to handicap. As a result, if the trade surplus exceeds $16B, we expect AUD/USD to rally. If the trade surplus is less than $14.5B, we expect the AUD/USD to weaken. REACTIVE TRADE

TECHNICALS

1.0500 cleared
1.0550 next target of longs
1.0450 most immediate support

The Aussie finally cleared the 1.0500 level but it will likely need to extend the move through 1.0515 to generate momentum for a run at 1.0550 as the power move in comm dollars continues.

4. USD/DKK – Denmark CPI

FUNDAMENTALS
CPI expected @ 0.4% (3 AM ET / 7 GMT)
Our View – Neutral
Reason – Neutral
If CPI grows by less than 0.1% = Buy USD/DKK
If CPI grows by 0.8% or more = Sell USD/DKK

Inflation is an important release for most countries and Denmark is no exception. Consumer price growth is expected to slow significantly in March. The data should be traded reactively. If CPI growth is less than 0.1%, we expect USD/DKK to rally. If CPI growth is greater than 0.8%, we expect USD/DKK to weaken. REACTIVE TRADE

TECHNICALS

5.7000 given
5.6500 next support
5.7500 caps upside

The slide in USD/DKK just broke a key support level with 5.700 now given the pair could drift to 5.6500 while upside is capped by 5.7500

5. USD/JPY – FOMC Minutes

FUNDAMENTALS
FOMC Minutes expected @ (2 PM ET / 18 GMT)
Our View – Bullish USD
Reason – Stronger NFP and Retail Sales
If talk of tapering asset purchases gained momentum = Buy USD/JPY
If Fed officials are cautious about tapering asset purchases = Sell USD/JPY

While we think FX traders should take tomorrow’s FOMC minutes with a grain a salt, the release could still yield some initial volatility for USD/JPY. Given the big jump in payrolls in February and the sharp rise in retail sales, we expect more optimism from the Fed. Therefore we believe the data can be traded proactively or reactively. For those who choose to wait, if the talk of tapering asset purchases gained momentum, we expect USD/JPY to rally. If Fed officials are cautious about tapering asset purchases, we expect USD/JPY to weaken. REACTIVE TRADE

TECHNICALS

1st run to 100.00 fails
But 99.00 holds
Break of 99.65 highs opens another test of 100.00

USD/JPY failed in its first run towards 100.00 but the fact that the pair held 99.00 suggest that longs could mount another charge. The key is break of yesterday’s highs at 99.65 which open the path to the move.