Trading NZD Ahead of RBNZ

Trading NZD Ahead of RBNZ

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Trading NZD Ahead of RBNZ

The New Zealand dollar is trading strongly ahead of the Reserve Bank’s monetary policy announcement and the question tomorrow will be whether the economy deteriorated enough to warrant three back-to-back rate cuts. Every one of the 17 economists surveyed by Bloomberg expect a 25bp rate cut but at the last meeting, the central bank dropped its reference to NZD being at an unjustified level which suggested they could keep rates steady in September. While there have been widespread problems in China, taking a look at the second table below, consumer spending, job ads and the housing market saw improvements since the last meeting. Dairy prices also increased at the last 2 auctions leaving the Global Dairy Trade index at a higher level in September compared to July. For these reasons, we believe that another rate cut is not a done deal and if we are right, the New Zealand dollar will spike higher.

Technically, NZD/USD still remains in a downtrend with near term resistance at the September highs right above 64 cents. If this level is broken, there’s no major resistance until 65 cents. On the downside, the August 24th spike low at 62 cents is support.

USD/JPY Above 120 – More Gains Ahead?

USD/JPY Above 120 – More Gains Ahead?

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USD/JPY Above 120 – More Gains Ahead?

With most of continental Europe closed for trading, USD/JPY broke through 120 to hit its strongest level in more than 2 weeks. What’s interesting about the move is that it occurred on a day with softer U.S. data. We had an unexpected decline in construction spending, softer than anticipated manufacturing ISM and University of Michigan consumer sentiment reports. However on Thursday jobless claims dropped to its lowest level in 15 years which bodes very well for next week’s labor market report. We will be focused on non-dollar drivers in the front of the week with the RBA rate decision, U.K. election, New Zealand and Australian employment reports scheduled for release. The uncertainty and risk posed by these reports could make the U.S. dollar more attractive. Towards the end of the week, the focus will turn to non-farm payrolls. Given last month’s surprisingly anemic job growth and the big improvement in jobless claims, everyone expects a significant rebound in payroll growth. The unemployment rate is also expected to drop to 5.4%, which would represent a big improvement that should breathe new life into the U.S. dollar. At the same time, Japan’s Global Pension Investment Fund, who widened their investment mandate will lend support to USD/JPY as they expand their purchases of foreign assets.

Technically, although 120 is an important psychological level for USD/JPY, there are many layers of resistance in the currency pair above current levels. First we have the 61.8% Fibonacci retracement of the 1998 to 2011 decline at 120.16, followed by the Feb high of 120.50 and the April high of 120.85. If the currency pair breaks above all of these levels, it would then face stiff resistance at the March high of 122. On the downside losses should be limited to the March low at 118.33.

NZD/CAD – Fresh Highs Ahead?

NZD/CAD – Fresh Highs Ahead?

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Fundamentals
We talked about the kiwi strength earlier today when we noted that,”The New Zealand dollar was propelled by comments from the country’s Prime Minister John Key, a former currency trader himself, who stated in CNBC interview that in his opinion intervention would not work. Mr. Key was referring to the kiwi’s strength especially against the Australian dollar as the cross continues to hover near parity.

In Mr. Key’s view intervention only works at the points of extreme, but is ineffective against a long sustained trend. With RBNZ resolutely set against lowering rates in the foreseeable future the kiwi remains the preeminent carry trade in the industrialized world and that factor continues to prop the unit against G-10 currencies.”

With tomorrow’s CAD employment data due at 12:30 GMT the prospect of big miss and a therefore the possibility of yet another rate cut by the BOC looms large. Therefore, we could have a trigger that could push the pair to fresh yearly highs as rate differentials continue to widen out.

Technicals
Having made a series of higher lows the uptrend in the pair remains in tact and the 9600 figure is the next target of the longs which if broken opens up the way to a run towards .9800

USD/CAD Ahead of Bank of Canada Rate Decision

USD/CAD Ahead of Bank of Canada Rate Decision

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USD/CAD Ahead of Bank of Canada Rate Decision

Fundamentals

The next major central bank announcement will be from Canada, which is why USD/CAD is in play for the next 24 hours. On the eve of the rate announcement, the currency pair hovers not far from its 5 year high. Two months ago, the BoC dropped the word neutral from their monetary policy statement, fueling bets that they are more open to the idea of raising interest rates. However there is very little chance that Canada will raise rates before the U.S. and the Federal Reserve is not slated to tighten until the middle of next year at the earliest. While the labor market has seen dramatic improvements leading to a pickup in retail sales and inflation is on the rise, manufacturing and trade activity along with Q3 GDP growth fell short of expectations. Oil prices also dropped more than 17% since the last monetary policy meeting. Therefore we don’t expect any renewed optimism from the BoC and if instead they express concerns about the volatility of oil, USD/CAD could test its 5 year high of 1.1467.

Technicals

Taking a look at the monthly chart of USD/CAD if the currency pair breaks its current 5 year high of 1.1467, 1.15 will serve as near term resistance but 1.1540, the 38.2% Fibonacci retracement of the 2007 to 2009 rally will be the key level to watch. On the downside, 1.12 remains support for USD/CAD.

USD/JPY – Fresh High’s Ahead?

USD/JPY – Fresh High’s Ahead?

Chart Of The Day

Fundamentals

USD/JPY has remained near its multi- year highs retracing only mildly after hitting 116.00 several days ago. The Japanese monetary authorities continue to pressure the yen as they remains wholly committed to further accommodation and balance sheet expansion. However, the next leg of the trade may be US driven if the data from North America continues to support the thesis of US out performance. Today’s decent Walmart numbers may be a positive precursor to tomorrow’s US Retail Sales figures as the pick up in jobs and wages along with sharp decline in oil prices may be finally translating into robust consumer demand and ultimately higher US yields which should help the pair. Therefore, a beat in the data tomorrow could result in yet more multi year highs in USD/JPY.

Technicals

USD/JPY has clearly ran into a bi of resistance at the 116.00 level but a break higher could open a run towards 118.00 while a failure could pull the pair all the way to fill the gap open at 112.50

BKSWING 2 New GBP, Cancel NZD/CHF Order

Swing

Tomorrow’s Scottish referendum is hands down the most important event risk for the British pound this week. This is one of those events that can easily trigger a 150 to 300 pip move in a currency. Although we believe that Scotland will vote to remain part of the UK, if they don’t it will be a larger surprise for the currency. As such we are placing 2 orders in the GBP to take advantage of this opportunity. Cancel the NZD/CHF order but please remember we are STILL long EUR/CHF and maintain a EUR/USD Sell Order

1. Place order to Buy GBP/CHF at 1.5458
Stop at 1.5398
Close 1/2 at 1.5488, move stop to breakeven
Close rest at 1.5875

2. Place order to Sell GBP/USD at 1.6025
Stop at 1.6085
Close 1/2 at 1.5995, move stop to breakeven
Close rest at 1.5575

We still have the following pending order:

1. Place order to Sell EUR/USD at 1.2835
Stop at 1.2895
Close 1/2 at 1.2805, move stop to breakeven
Close rest at 1.2675

***Remember, if 2 orders trigger without one hitting T1 first, all other orders are canceled

4 New Orders Ahead of RBNZ and AU Employment

Swing Top 5

Tonight is a BUSY one for the Australian and New Zealand dollars with the RBNZ rate decision and Australian employment report scheduled for release. Many of the major currencies are at key levels and these event risks could drive it beyond those rates. To take advantage of the potential volatility, we are laying out the following new pending orders. Please remember we are STILL long EUR/CHF but since it already hit T1, we can allow for 2 additional open trades before canceling the rest.

Place the following pending orders:

1. Place order to Sell NZD/CAD at 0.8977
Stop at 0.9037
Close 1/2 at 0.8947, move stop to breakeven
Close rest at 0.8825

2. Place order to Buy NZD/CHF at 0.7782
Stop at 0.7722
Close 1/2 at 0.7812, move stop to breakeven
Close rest at 0.7925

3. Place order to Buy EUR/AUD at 1.4228
Stop at 1.4168
Close 1/2 at 1.4258, move stop to breakeven
Close rest at 1.4450

4. Place order to Sell EUR/USD at 1.2835
Stop at 1.2895
Close 1/2 at 1.2805, move stop to breakeven
Close rest at 1.2675

***Remember, if 2 orders trigger without one hitting T1 first, all other orders are canceled

BKSWING – 2 NEW AUD Orders ahead of Chinese Trade

Swing

Chinese trade numbers are scheduled for release tonight and we want to add 2 new orders to take advantage of the opportunity:

1. Sell AUD/NZD at 1.0883


Stop at 1.0943

Close 1/2 at 1.0853, move stop to breakeven

Close rest at 1.0710

2. Sell AUD/JPY at 0.9413

Stop at 0.9473

Close 1/2 at 0.9383, move stop to breakeven

Close rest at 0.9250

We still have the following pending orders on:

1. Sell EUR/JPY at 135.91

Stop at 136.51

Close 1/2 at 135.61, move stop to breakeven

Close rest at 134.25

2. Sell EUR/AUD at 1.4187

Stop at 1.4247

Close 1/2 at 1.4157, move stop to breakeven

Close rest at 1.4067

We still have the following pending orders on:

1. Buy GBP/USD at 1.6947

Stop at 1.6887

Close 1/2 at 1.6977, move stop to breakeven

Close rest at 1.7050

2. Buy EUR/GBP at 0.8060

Stop at 0.8000

Close 1/2 at 0.8090, move stop to breakeven

Close rest at 0.8150

3. Sell NZD/USD at 0.8373

Stop at 0.8433

Close 1/2 at 0.8343, move stop to breakeven

Close rest at 0.8210

4. Sell AUD/USD at 0.9175

Stop at 0.9235

Close 1/2 at 0.9145, move stop to breakeven

Close rest at 0.9015

5. Buy AUD/NZD at 1.1075

Stop at 1.1015

Close 1/2 at 1.1105, move stop to breakeven

Close rest at 1.1200

***Remember, if 2 orders trigger without one hitting T1 first, all other orders are canceled

BKSWING – Important! Adjusting Trades ahead of AU Employ and ECB

Swing

We are adjusting trades ahead of Australian employment and ECB Rate Decision


***CANCEL the following orders

1. CANCEL AUD/NZD Sell order at 1.0883

2. CANCEL GBP/NZD Sell Order at 1.9718

3. CANCEL EUR/NZD Sell order at 1.5656

Add the following NEW EUR/JPY and EUR/AUD Orders:

1. Sell EUR/JPY at 135.91

Stop at 136.51

Close 1/2 at 135.61, move stop to breakeven

Close rest at 134.25

2. Sell EUR/AUD at 1.4187

Stop at 1.4247

Close 1/2 at 1.4157, move stop to breakeven

Close rest at 1.4067

We still have the following pending orders on:

1. Buy GBP/USD at 1.6947

Stop at 1.6887

Close 1/2 at 1.6977, move stop to breakeven

Close rest at 1.7050

2. Buy EUR/GBP at 0.8060

Stop at 0.8000

Close 1/2 at 0.8090, move stop to breakeven

Close rest at 0.8150

3. Sell NZD/USD at 0.8373

Stop at 0.8433

Close 1/2 at 0.8343, move stop to breakeven

Close rest at 0.8210

4. Sell AUD/USD at 0.9175

Stop at 0.9235

Close 1/2 at 0.9145, move stop to breakeven

Close rest at 0.9015

5. Buy AUD/NZD at 1.1075

Stop at 1.1015

Close 1/2 at 1.1105, move stop to breakeven

Close rest at 1.1200

***Remember, if 2 orders trigger without one hitting T1 first, all other orders are canceled

BKSWING – New AUD and NZD Trades ahead of RBNZ, AU Employment

Swing

We’ve got less than 24 hours to go before this week’s most important event risk – the RBNZ rate decision. The RBNZ is widely expected to raise interest rates but they have every reason to keep them unchanged if they choose to do so. Between their decision on what to do with interest rates this month and forward guidance, NZD should have an unusually large reaction to the monetary policy announcement. We are laying out a few NZD orders to take advantage of that opportunity. At the same time, Australian employment is also one of this week’s top reports and the state of the labor market will play a big role in whether the currency fails at or takes out its year to date high.

***Remember, if 2 orders trigger without one hitting T1 first, all other orders are canceled

New Pending Orders

1. Sell EUR/NZD at 1.5738

Stop at 1.5798

Close 1/2 at 1.5708, move stop to breakeven

Close rest at 1.5595

2. Buy NZD/USD at 0.8650

Stop at 0.8590

Close 1/2 at 0.8680, move stop to breakeven

Close rest at 0.8775

3. Buy GBP/NZD at 1.9710

Stop at 1.9650

Close 1/2 at 1.9740, move stop to breakeven

Close rest at 1.9900

4. Buy GBP/AUD at 1.7962

Stop at 1.7902

Close 1/2 at 1.7992, move stop to breakeven

Close rest at 1.8150

5. Buy AUD/NZD at 1.1067

Stop at 1.1007

Close 1/2 at 1.1097, move stop to breakeven

Close rest at 1.1200

We still have the following pending orders:

1. Sell GBP/JPY at 170.77

Stop at 171.37

Close 1/2 at 170.47, move stop to breakeven

Close rest at 169.57

2. Sell EUR/JPY at 137.77

Stop at 138.37

Close 1/2 at 137.47, move stop to breakeven

Close rest at 136.27

3. Sell EUR/GBP at 0.8044

Stop at 0.8104

Close 1/2 at 0.8014, move stop to breakeven

Close rest at 0.7950

***Remember, if 2 orders trigger without one hitting T1 first, all other orders are canceled