Top 5 – 07.09.2013

*Top 5 Archive Members Only Top 5


DATE: Tuesday July 9, 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 Credit Card Spending

Credit Card Spending expected @ 0.6% (6:45PM ET / 20:45)
Our View – Neutral
Reason – Neutral
If Credit Card Spending rises by 1% or more = Buy NZD/USD
If Credit Card Spending falls by -1% or more = Sell NZD/USD

New Zealand credit card spending is not a huge market mover for the NZD/USD unless there is a big surprise. Therefore the data is best traded reactively. If credit card spending rises by 1% or more, the NZD/USD can be bought for a move higher. If credit card spending falls by 1% or more, the NZD/USD can be sold. REACTIVE TRADE


7700 finds support
Power move through 7800
Break of 7850 opens run to 7900

The kiwi looks to have stabilized at the 7700 level and now the power move through 7800 puts it squarely into the upside mode with a takeout of 7850 opening up a run towards 7900 figure

2. AUD/USD – Australian Business Confidence

Business Confidence expected @ (9:30 PM ET / 1:30 GMT)
Our View – Neutral
Reason – Neutral
If NAB exceeds 3 = Buy AUD/USD
If NAB is less than -5 = Sell AUD/USD

This month’s Australian business confidence report is a tough call. There have been some downside surprises in Chinese economic data but domestic data has been mixed. Business confidence is an important release but is only market moving if there is a large enough surprise. This month’s report should be traded reactively. If NAB confidence exceeds 3, we expect the AUD/USD to rise. If NAB confidence falls to -5 or less, we expect the AUD/USD to slide. REACTIVE TRADE


9000 support holds for now
9225 key to further upside
9300 dominates near term resistance

The bounce in the Aussie suggests that the pair may have found a bottom ahead of the 9000 level for now, but to get any upside traction it must generate a move through 9225 and will then have to meet stiff resistance at 9300.

3. EUR/CHF – Swiss Retail Sales

Retail Sales expected @ (3:15AM ET / 7:15 GMT)
Our View – Neutral
Reason – Neutral
If Retail Sales growth is less than 2.5% = Buy EUR/CHF
If Retail Sales exceeds 4% = Sell EUR/CHF

Swiss retail sales are scheduled for release tomorrow. Consumer spending is the backbone of every economy including Switzerland’s which is why tomorrow’s economic report can have a significant impact on the Swissie. However, the country does not release economic data often, making it difficult to forecast a surprise. If we had to guess given that the unemployment rate lower, spending probably improved. However it is best to wait for the data to be released before taking a trade. If retail sales growth is less than 2.5%, EUR/CHF should extend its gains. If it exceeds 4%, we could see a sharp retracement in the currency pair. REACTIVE TRADE


2300-2400 range finally breaks
2425 key to upside
2500 caps upside move

EUR/CHF after consolidating for a while at the 2300-2400 range has finally broken the upside end of the channel, although a full break won’t happen until it can clear the 2425 level which would then open the run towards longer term resistance at the 1.2500 level.

4. GBP/USD – UK Industrial Production

Industrial Production @ 0.2% (4:30 AM ET / 12:30 GMT)
Our View – Bullish GBP
Reason – PMI Manufacturing at 25 month high, new orders and export orders rise
If Industrial Production rises by 0.6% or more = Buy GBP/USD
If Industrial Production drops by -0.1% or more = Sell GBP/USD

UK industrial production and trade balance are scheduled for release tomorrow. We have good reasons to believe that the data will surprise to the upside because manufacturing activity hit a 25 month high according to the latest PMI numbers. More specifically, there was strength in new orders and export orders. This data can therefore be traded proactively or reactively. For those who choose to wait, if industrial production rises by 0.6% or more, the GBP/USD should rally. However if industrial production drops by -0.1% or more, the currency pair can be sold for a move lower. PROACTIVE or REACTIVE TRADE


1.4800 double bottom holds
1.5000 now resistance
Consolidation possible

Cable saw a bounce as well today, as the pair stopped just shy of the double bottom at the 1.4800 level, but the rebound has stalled ahead of the key 1.5000 level which was former support and now becomes resistance.

5. USD/CAD – Canadian Housing Starts

Canadian Housing Starts expected @ 187.5K (8:15 AM ET / 12:15 GMT)
Our View – Neutral
Reason – Neutral
If Housing Starts are less than 160K = Buy USD/CAD
If Housing Starts rise by 225K or more = Sell USD/CAD

Canadian housing starts are not a huge market mover for the Canadian dollar unless there is a big surprise.  This data is therefore best traded reactively.  If housing starts are less than 160K, USD/CAD can be bought for a quick move higher.  If housing starts rise by 225K or more, USD/CAD can be sold. REACTIVE TRADE


1.0600 still caps
1.0500 near term support
Topping consolidation?

USD/CAD continues to run into resistance at the 1.0600 level as the 1.0500-1.0600 corridor now form a consolidation pattern that may be signaling a near term top.