TOP 5 HOT IDEAS

DATE: Monday Dec 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. AUD/USD – Chinese Trade

FUNDAMENTALS
Chinese Trade Balance expected @ $21 Exports expected at 7% (8:30 PM ET / 1:30 GMT)
Our View – Neutral
Reason – Neutral
If exports grow by 7.5% or more = Buy AUD/USD
If exports grows by 5% or less = Sell AUD/USD

Chinese trade numbers are scheduled for release on Saturday, which means that it can only be traded reactively. However the data is important enough to have a meaningful impact on the AUD/USD when it opens for trading on Sunday. When it comes to the trade numbers, exports are the most important part of the release. Therefore if exports grow by 7.5% or more, the AUD/USD can be bought for a move higher. If exports grow by 5% or less, the AUD/USD can be sold. REACTIVE TRADE

TECHNICALS

9100 tested
9150 next level
Bottom in place

Aussie continues to recover with 9100 now taken out the pair eyes 9150 next while 9000 supports.

2. USD/JPY – Eco Watchers Survey

FUNDAMENTALS
Eco Watchers Survey expected @ (0 AM ET / 5 GMT)
Our View – Neutral
Reason – Neutral
If Eco Watchers survey is 49 or lower = Buy USD/JPY
If Eco Watchers survey is 53 or better = Sell USD/JPY

Japan’s eco watchers survey is not a huge market mover for USD/JPY unless there is a big surprise. Therefore the data is best traded reactively. If the Eco Watchers survey drops to 49 or lower, USD/JPY can be sold for a quick move lower. If the Eco Watchers survey rises to 53 or better, USD/JPY can be bought. REACTIVE TRADE

TECHNICALS

103.00 still not recovered
103.30 key to upside
102.00 supports

USD/JPY recovered some of its losses but was not able to overcome 103.00 barrier. 102.00 is now support.

3. EUR/CHF – Swiss Unemployment

FUNDAMENTALS
Swiss Unemployment expected @ 3.2% (1:45 AM ET / 6:45 GMT)
Our View – Neutral
Reason – Neutral
If Switzerland’s unemployment rate is 3.3% or higher = Buy EUR/CHF
If Switzerland’s unemployment rate is 3% or less = Sell EUR/CHF

Switzerland’s unemployment rate is difficult to handicap but best traded reactively. If the unemployment rate rises to 3.3% or higher EUR/CHF can be bought for a move higher. If the unemployment rate drops to 3% or lower, EUR/CHF can be sold. REACTIVE TRADE

TECHNICALS

Downside bias continues
2200 eyed
Break could push to 2150

EUR/CHF continues to burrow lower as we noted last week with 2200 now the near term target of shorts.

4. EUR/USD – German Industrial Production

FUNDAMENTALS
German IP expected @ 0.7% (6:00 AM ET / 11 GMT)
Our View – Neutral
Reason – Rise in PMI, Drop in Factory Orders
If German IP grows by 0.9% or more = Buy EUR/USD
If German IP grows by 0.2% or less = Sell EUR/USD

German industrial production numbers are scheduled for release tomorrow and this month’s report should only be traded reactively because a rise in the PMI manufacturing report was offset by a decline in factory orders. If industrial production grows by 0.9% or more, we expect the EUR/USD to rally. If industrial production grows by 0.2% or less we expect the EUR/USD to decline. REACTIVE TRADE

TECHNICALS

3700 taken out
3800 key resist level
3500 major support

The rally in EUR/USD remains unabated with 3700 taken out, but 3800 is much more serious resistance level.

5. USD/CAD – Canadian Housing Starts

FUNDAMENTALS
Canadian Housing Starts expected @ 195K (8:15 AM ET / 13:15 GMT)
Our View – Neutral
Reason – Neutral
If Housing Starts are less than 180K = Buy USD/CAD
If Housing Starts rise by 210K or more = Sell USD/CAD

Canada’s housing starts report is not a huge market mover for the Canadian dollar unless there is a big surprise so the data is best traded reactively. If housing starts are less than 180K, USD/CAD can be bought for a quick move higher. If housing starts rise by 210K or more, USD/CAD can be sold. REACTIVE TRADE

TECHNICALS

1.0700 caps again
1.0600 supports
Topping out possible

USD/CAD has failed to close above the 1.0700 level again and the pair is in danger of topping out if 1.0600 is given