Top 5 – 04.15.13

*Top 5 Archive Members Only Top 5


DATE: Monday April 15, 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 – PMI Services

PMI Services @ (6:30 PM ET / 22:30 GMT)
Our View – Bearish NZD
Reason – Lower Business PMI and Credit Card Spending
If the PMI index exceeds 57 = Buy NZD/USD
If the PMI index drops to 54 or lower = Sell NZD/USD

We have good reasons to believe that service sector activity in New Zealand slowed last month because the country was in the midst of a drought, the business PMI index fell and credit card spending declined. As a result, we believe that the data can be traded proactively or reactively. For those who choose to wait, if the PMI index exceeds 57, the NZD/USD can be bought for a reactive trade higher. If the index drops to 54 or lower, NZD/USD can be sold. PROACTIVE or REACTIVE TRADE


Stalls ahead of 8700
8500 deep support
8675 now key resistance

Kiwi flamed out ahead of 8700 and looks to be starting a correction after a strong run higher. 8675 is the key level to the upside while 8500 supports the downside.

2. AUD/USD – Chinese Data Dump

Chinese Q1 GDP, Retail Sales and Industrial expected @ (10 PM ET / 2 GMT)
Our View – Neutral
Reason – Neutral
If Q1 GDP YoY is 8% or higher = Buy AUD/USD
If Q1 GDP YoY is 7.8% or lower = Sell AUD/USD

Sunday night is a big night in Asia with a tremendous amount of heavy hitting Chinese data on the calendar. Q1 GDP will be the main focus as investors will be keen to see whether Chinese growth slowed or accelerated in the first 3 months of the year. Based on the market’s forecasts, stronger growth is expected and if that is the case, the AUD/USD could benefit significantly. However if growth suddenly slows, then the AUD/USD could fall off its lofty levels. Chinese data is always difficult to handicap and therefore best traded reactively. REACTIVE TRADE


1.0500 given
1.0450 key support
1.0575 upside break out level

The Aussie has turned lower as 1.0550 proved to be too much resistance and with the pair having broken 1.0500 it now targets the key support at 1.0450 while 1.0575 is the key level to the upside.

3. EUR/USD – Eurozone Trade Balance

Eurozone Trade Balance expected @ 10B (5 AM ET / 9 GMT)
Our View – Neutral
Reason – Neutral
If Trade surplus exceeds 11B = Buy EUR/USD
If Trade surplus is smaller than 8B = Sell EUR/USD

Eurozone trade numbers are scheduled for release on Monday and whenever it comes to handicapping EZ data, we always turn to the Germany and France, the region’s largest economies. In the month of February, the German trade balance increased but French trade balance deteriorated, creating a bit of a wash. As a result Eurozone trade numbers should only be traded reactively. If the trade surplus exceeds 11B, the EUR/USD can be bought for a quick reactive trade. If the surplus is smaller than 8B, the EUR/USD can be sold. REACTIVE TRADE


Bullish reversal
3150 still caps
break of 3150 targets 3300

The EUR/USD staged a bullish reversal end of day and looks ready to challenge the 1.3150 level once again with upside break there opening up the path to a run towards 1.3300

4. USD/JPY – Empire State Survey

Empire State Survey expected @ 7 (8:30 AM ET / 12:30 GMT)
Our View – Neutral
Reason – Neutral
If Empire State exceeds 10 = Buy USD/JPY
If Empire State index drops to 6 or lower = Sell USD/JPY

The Empire State manufacturing survey is scheduled for release on Monday and as one of the first releases from the manufacturing sector, it is difficult to handicap and therefore best traded reactively. More specifically, if the Empire state survey index exceeds 10, USD/JPY can be bought for a move higher. If the index drops to 6 or lower, the recent correction in USD/JPY could gain momentum. REACTIVE TRADE


Breakdown off the highs
98.00 gap fill beckons
98.00 now becomes key support

USD/JPY has set a short term high and is now in a corrective mode with 98.00 gap fill as the first downside target. 99.50 caps upside for now while 98.00 is key support.

5. USD/CAD – Canadian Existing Home Sales

Existing Home Sales expected @ (9 AM ET / 13 GMT)
Our View – Neutral
Reason – Neutral
If Home Sales fall by more than 2% = Buy USD/CAD
If Home Sales rise by 1% or more = Sell USD/CAD

Canadian existing home sales are scheduled for release tomorrow and the data is not a big market mover for the CAD unless there is a big surprise. Therefore the data is best traded reactively. If home sales fall by more than 2%, we expect USD/CAD to fall. If home sales rise by 1% or more, we expect USD/CAD to fall. REACTIVE TRADE


1.0100 contains downside
1.0150 caps upside
Break of 1.0100 puts parity in view

USD/CAD remains below the break of 1.0150 but 1.0100 is proving to be tough area to penetrate. A break there opens up a path to parity.