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*Good morning/afternoon everyone!*
USD/JPY is selling off for the 5th consecutive trading session and this weakness is driving the greenback lower against all of the major currencies. Yesterday’s softer existing home sales report can be blamed but ultimately, it is the trend of softer U.S. data that is encouraging profit taking in the greenback this week. There are no major U.S. economic reports on the calendar until Friday and today’s Market PMI numbers will only have limited impact on the currency. Therefore investors should keep an eye on U.S. yields because its not clear whether the selling will continue. The most important economic report released this morning was Eurozone PMIs but the data failed to help the euro as weaker activity in the service sector was offset by stronger activity in manufacturing. The strongest performing currencies this morning are the Australian dollar and sterling. AUD and NZD benefitting from the rally in the Shanghai Composite index and China’s new policies to support growth while healthier UK CBI data is helping sterling. Looking ahead, we expect the Canadian dollar to trade higher on the back of morning’s rally in oil prices and the U.S. dollar to extend its losses during North American trade.
*The MAIN THEMES I see today are*
+CAD, +GBP, +NZD, +AUD
Mildly +EUR, +CHF
*Today’s Initial Trades*
Here’s the summary –
1. Buy NZDUSD at .6798, Stop at.6771, Target .6827
2. Sell USDCAD at 1.3152, stop at 1.3180, Target 1.3124
3. Sell EURNZD at 1.7211, Stop at 1.7239, Target 1.7183
4. Buy GBPCHF at 1.3039, Stop at 1.3011, Target 1.3067
Close ALL open day trades by 10:20AM NY / 15:20 GMT