Top 5 – 07.11.2013

*Top 5 Archive Members Only Top 5


DATE: Thursday July 11, 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 Business PMI

Business PMI @ (6:30 PM ET / 22:30 GMT)
Our View – Neutral
Reason – Neutral
If PMI exceeds 60 = Buy NZD/USD
If PMI is 58 or less = Sell NZD/USD

While weaker economic activity in Australia and China points to a lower PMI index, domestic conditions in New Zealand have improved which is why this month’s report is difficult to handicap. Therefore the data is best traded reactively. If the PMI index exceeds 60, the NZD/USD can be bought for a move higher. If the index drops to 58 or lower, the NZD/USD can be sold. REACTIVE TRADE


7900 still caps
Hesitation to upside
7700 supports

The kiwi could not capitalize on anti-dollar sentiment and continued to hesitate ahead of the 7900 level as consolidates in 7700-7850 corridor.

2. AUD/USD – Australian Employment

Employment Change expected @ 0K (9:30 PM ET / 1:30 GMT)
Our View – Bullish AUD
Reason – PMI Shows Stronger Services, Manufacturing and Construction Employment but
If Employment rises by 10K or more = Buy AUD/USD
If Employment drops by -10K or more = Sell AUD/USD

We have good reasons to believe that labor market conditions improved slightly in the month of June because the employment component of the manufacturing, service and construction sector PMI reports ticked higher. The data can be traded proactively or reactively. For those who choose to wait, if employment rises by 10K or more, the AUD/USD can be bought for a further recovery. However if employment declines by 10K or more, the AUD/USD can be sold. PROACTIVE or REACTIVE TRADE


9200 still caps
9000 remains key support
Break of 9300 needed for upside

The Aussie much like the kiwi stalled ahead of the 9200 level and must take it with force in order to preserve upside momentum. 9000 still the key downside support.

3. USD/JPY – Bank of Japan Rate Decision

BoJ Announcement expected 1% @ (TBD but usually around 1 AM ET / 6 GMT)
Our View – Neutral
Reason – Neutral
If BoJ leaves monetary policy unchanged = No Trade
If BoJ eases monetary policy = Buy USD/JPY

Central bank rate decisions are always important for a country’s currency but only if there’s potential for a change in monetary policy. If the BoJ leaves their asset purchase program and interest rates unchanged like we expect, the BoJ meeting will be a nonevent for USD/JPY, which is why we think the meeting can only be traded reactively. However if for whatever reason the BoJ decides to ease monetary policy, which we don’t expect, then we believe USD/JPY can be sold for a stronger move lower. REACTIVE TRADE


100.00 broken
99.00 next downside level test
101.00 now resistance

A nasty reversal in USD/JPY as the pair slid through the 100.00 level with 99.00 now coming into view as the next level of support. Meanwhile 101.00 now becomes resistance to upside.

4. USD/CAD – New Housing Price Index

New Housing Price Index expected @ 0.2% (8:30 AM ET / 12:30 GMT)
Our View – Neutral
Reason – Neutral
If House Prices grow by 0% or less = Buy USD/CAD
If House Prices grow by 0.4% or more = Sell USD/CAD

Canadian house prices are scheduled for release on Thursday and the report is not usually market moving for USD/CAD unless there is a big surprise. Therefore the data should be traded reactively. If house prices grow by 0% or less, we expect USD/CAD to rally. If house prices grow by 0.4% or more, we expect USD/CAD to slide. REACTIVE TRADE


1.0500 given
1.0600 now swing top
1.0400 next in view

USD/CAD has finally rolled over confirming that 1.0600 is the swing top for now. With 1.0500 given the 1.0400 level is the next test of the shorts while 1.0600 caps the upside.

5. USD/JPY – Jobless Claims

Jobless Claims @ 340K (8:30 AM ET / 12:30 GMT)
Our View – Neutral
Reason – Neutral
If jobless claims rise by 325K or less = Buy USD/JPY
If jobless claims rise by 360K or more = Sell USD/JPY

U.S. jobless claims have not had a significant impact on the dollar for the past few months. The data is difficult to predict and should be traded reactively only if there is a big surprise. If jobless claims rise by 325K or less, USD/JPY can be bought for a move higher. If jobless claims rise by 360K or more, USD/JPY can be sold. PROACTIVE or REACTIVE TRADE


Massive reversal
1.3000 comes into view
1.2800 now support

EUR/USD staged a massive reversal taking out the 1.2900 and 1.2950 levels and now looks to target the key 1.3000 level as the short squeeze continues. 1.2800 now acts a deep support