Today’s Trades 10.13.2017 – EURUSD, EURNZD, EURGBP, CADCHF

Swing

*Good morning/afternoon everyone!*

The most important pieces of U.S. data this week are scheduled for release today and the steady to slightly weaker performance for the dollar suggests that investors are worried that retail sales and CPI will not live up to lofty expectations. Or they believe that even if these numbers are strong, it will not alter the odds of a December rate hike which is still nearly 2 months away. With that in mind, U.S. yields are pointing higher before the reports so we still expect a run-up in the greenback ahead of the 8:30am numbers. Meanwhile short covering continues to drive the AUD and NZD as these currencies shrug off mixed Chinese trade data. Sterling has extended its gains while the euro lags behind. The loonie is quiet but should tick up as well.

*The MAIN THEMES I see today are*

-EUR
+GBP
+AUD
+NZD
+CAD

*Trading Biases*

-EUR, -CHF
+GBP, +AUD, +NZD, +CAD
mildly +USD, -JPY

*Today’s Ideas*

1. Sell EURGBP a .8893, Stop at .8923, Target .8873
2. Sell EURUSD at 1.1821, Stop at 1.1851, Target 1.1801
3. Sell EURNZD at 1.6546, Stop at 1.6576, Target 1.6526
4. Buy CADCHF at .7824, Stop at .7794, Target .7854

Cancel ALL pending orders by 3:30PM NY / 19:30 GMT / 5:30AM AEST
Close ALL open day trades by 4PM NY / 20 GMT / 6AM AEST

EUR/NZD Back to 1.66?

Chart Of The Day

eurnzd091817

Despite a sharp rise in U.S. yields and the U.S. dollar today, euro held up fairly well because the ECB has made their monetary policy plans very clear. They expect to make an announcement on reducing bond purchases next month, kicking off a gradual phase on policy normalization. Until that day approaches, the euro should remain bid as long as European officials don’t attempt to talk it down.
Meanwhile with only a few more days to go before this weekend’s election, the polls in New Zealand are too close to call and that should be a problem for the New Zealand dollar. The economy is struggling under the weight of a strong currency and with no immediate plans to raise interest rates, the New Zealand dollar should underperform as investors reduce positions ahead of the election. The RBNZ’s cautious outlook also casts a dark cloud on the currency.

Technically today’s rally has taken EUR/NZD to the 20-day SMA. There are still lower highs and lowers but if the currency pair manages to rise above 1.6525, which would also be above the 50% Fib retracement of the April 2015 to August 2015 rally, then the next stop should be 1.66.

EURNZD – Topped?

EURNZD – Topped?

Chart Of The Day

The EURNZD appears to have made swing high at the 1.6050 level and is now starting to slide towards the 1.5800 level. After a massive rally that saw the euro outperform the comm dollars, the euro now appears to be in profit taking mode.

The surest sign that buying may have reached its limit is the fact that euro failed to rally off positive news from PMI and IFO data today. Meanwhile, the kiwi has been well bid for several days and managed to take out and hold the key .7000 figure in today’s trade.

FX traders will get a look at New Zealand trade balance at the start of Asian session trade today and if the numbers beat the forecast the pair could quickly tumble towards the 1.5900 mark.

EUR/NZD to 1.57

EUR/NZD to 1.57

Chart Of The Day

EUR/NZD to 1.57

We like buying New Zealand dollars ahead of the Reserve Bank’s monetary policy announcement this week. Data from New Zealand has been pretty good with dairy prices rising for the fourth auction in a row and job growth improving in the first quarter. Employment increased by 1.2%, which helped to push the unemployment rate down to 4.9%. There’s been widespread improvement in New Zealand’s economy since their last meeting in March. Consumer spending is up thanks to a stronger labor market. Inflation and dairy prices are on the rise. Consumer and business confidence weakened but that could turn around as service and manufacturing sector activity continues to improve. The housing market is softer which the RBNZ wants to see. All of this argues for optimism from the Reserve Bank who already felt that the growth outlook was positive in March. We have chosen to buy NZD vs. EUR because Emmanuel Macron’s victory failed to inspire the strong gains in the euro that everyone had hoped for and instead, euro fell victim to buy the rumor, fade the news selling. European currencies are trading lower across the board this morning and it appears that more profit taking is possible.

Technically EURNZD has a lot of resistance below 1.6000. The attached weekly chart shows the 100 and 200 week SMAs hovering between 1.5880 and 1.5920 and the 61.8% Fibonacci retracement of the 2015 rally at 1.5885.

EUR/NZD – Back to 1.5800?

EUR/NZD – Back to 1.5800?

Chart Of The Day

Tomorrow the marquee event of the week will take place at the end of the day when the RBNZ makes it long anticipated interest rate announcement. Ahead of the event, the market has been generally complacent expecting only a 25bp rate cut. But New Zealand monetary officials have been very aggressive with their rhetoric and it’s not out of the question that they may cut as much as 50bp to push the currency lower.

The RBNZ want to see kiwi below the .7000 mark and generally, when the central bank wants to move the exchange rate, they have the power to do so. So the kiwi could be in a for fall tomorrow if the RBNZ decides to get aggressive with the market.

One way to play the action is through the EUR/NZD cross which is in the process of forming a nice cup and handle formation that suggests a possible breakout towards the 1.5800 level. With support at 1.5400 only a hundred pips away the risk and reward on the trade appears to be quite favorable if you believe the RBNZ rhetoric.

EUR/NZD – Headed Back to 1.52

EUR/NZD – Headed Back to 1.52

Chart Of The Day

EUR/NZD – Headed Back to 1.52

Euro ended the day unchanged against the greenback. Since breaking below the 200-day SMA last week the currency pair remains under pressure and vulnerable for another test and possible break of 1.10. The ECB continues to buy bonds with their purchases picking up steam over the past week. The reports of Italy’s banking troubles continue to grow and while it may not be the biggest story in the financial market right now, it could become the headline in the coming months. There’s not much in the way of Eurozone data this week and no major speeches from policymakers is scheduled so the euro should remain under pressure. While the New Zealand dollar also sold off, there was no catalyst for the pullback outside of profit taking. Data from New Zealand was actually strong with credit card spending rising 1.2% in the month of June. The country offers a generous 2% yield in a negative interest rate environment, the housing market is booming faster than the central bank would like and last week, the RBNZ warned that further rate cuts could lead to financial instability. For all of these reasons and more, we like selling EUR/NZD.

Technically today’s rally in EUR/NZD is a strong one but as long as the pair remains below the 1st standard deviation Bollinger Band at 1.5415, the downtrend remains intact. Considering that the low today was 1.5092, a reversal of today’s move could easily take EURNZD back below 1.5200.

EUR/NZD Big Trade 03.09.2016 – Stopped

Swing

Close EUR/NZD trade at market

We were stopped on EUR/NZD following surprise rate cut by RBNZ

BK – EUR/NZD Big Trade

Place Order to SELL EUR/NZD at 1.6238

Stop 1.6438

The next 2 monetary policy announcements will be from the RBNZ followed by the ECB. Given the recent improvements in NZ data we don’t see any chance of a RBNZ rate cut. While average hourly earnings are lower, house prices fell, consumer and business confidence declined, there’s enough improvement for the Reserve Bank to keep interest rates unchanged. The RBNZ may leave the door open to additional easing but the recent rise in AUD/NZD also reduces the pressure to ease. At the same time, we expect euro to drift lower again pre-ECB.

EUR/NZD 01.06.2015 +98

Swing

UPDATE – Close EUR/NZD at market for +90 to +100 pips depending on where you got in- we will revisit this trade on a bounce


BK EUR/NZD Big Trade – There’s Still One More ECB QE Trade

The Trade:

EUR/NZD

Sell 1 lot at market between 1.5290-1.5325

Place Order to Sell 1 additional lot at 1.5450

Stop for whole position at 1.5727

Risk on our BIG TRADES is large, so make sure your position is small.

We will manage the take profit dynamically and send out alerts on when to take profit and/or move your stop.

—–

When all else fails, central banks resort to printing money and buying government bonds. The Federal Reserve, Bank of England and the Bank of Japan have all done it and it won’t be long before the European Central Bank follows suit. If not for the legal and logistical challenges, the ECB would have resorted to Quantitative Easing a long time ago. However with oil prices breaking $50 a barrel and inflation falling even further as a result, the ECB is running out of options. Despite its complications, the ECB is turning to QE as a last resort. Based on the steep slide in the EUR/USD, investors expect the ECB to make the announcement as early as this month.

With EUR/USD having fallen declined, from 1.37 to 1.19 over the last 6 months, many traders are wondering if there is still an opportunity to take advantage in the ECB QE trade. While the pickings are slim, one trade that we like very much is selling EUR/NZD.

There are Still Skeptics who Believe Germany will Block QE

Technically under the European Union Treaty, the ECB is prohibited from financing individual governments. Germany who pretty much underwrites the euro has been a particularly vocal opponent of any policy that would expand the supply of money. Some investors still believe that the ECB won’t find enough support to launch QE. However ECB President Draghi believes that QE is within their mandate and more importantly, asset purchases aren’t new to the ECB. They already bought sovereign debt from countries like Greece, Spain and Italy between 2010 and 2012. The recent fall in oil prices makes deflation a risk that even the Germans cannot ignore. Therefore we believe that as the January 22nd ECB meeting approaches, the euro will continue to fall and when the actual announcement is made, the currency could head even lower.


Corporate Hedging and Spec Positioning Could Drive Euro Lower
– Corporations are notorious for doing a terrible job of hedging and while some must have sold euros on the way down, if the ECB announces QE, we could see further hedging as corporates rush to protect their balance sheets. According to the CFTC’s latest report, euro short positions are off its November highs, leaving room for fresh selling.

Of course, there’s also Greece, Spain, and Portugal – all of whom have elections this year. The risk of a political upset would only add the euro’s woes.

Why the NZD?

Now that we have established our view on why we think the euro will continue to fall, the next question is why the NZD. Despite sharp declines in dairy prices and slower Chinese growth, the Reserve Bank of New Zealand refuses to back away from its bias to raise rates. On Tuesday, dairy prices rose for the second auction in a row, validating their optimistic view on the economy. The New Zealand dollar traded sharply higher as a result and we think there’s more room to the upside especially in Asian trade.

The best part of selling EUR versus the NZD is that you Get Paid While You Wait for ECB QE. New Zealand still offers a 3.5% interest rate while the Eurozone offers zero. If the ECB eases, NZD should continue to outperform EUR.

Chart – EUR/NZD Headed for 1.50

We think EUR/NZD is headed for a break of 1.50. Therefore we recommend:

EUR/NZD

Sell 1 lot at market between 1.5290-1.5325

Place Order to Sell 1 additional lot at 1.5450

Stop for whole position at 1.5727

Risk on our BIG TRADES is large, so make sure your position is small.

We will manage the take profit dynamically and send out alerts on when to take profit and/or move your stop.

TrendCatcher Signals 10.07.2014 – Buy EUR/NZD

TrendCatcher

New BK Trend Catcher Signals for 10.07.2014

Buy EUR/NZD at market (1.6122)

Stop at 1.6057

First target (T1) at 1.6172, move stop to breakeven when T1 is hit

Second Target (T2) 1.6317

**If market price is higher (for short trades) or lower (for long trades) than our market price entry, trade can be taken with our same stops and targets.

**If your market price is WORSE than our market price entry and you still want to enter the trade than be sure to use our stops and targets.

Live Trades (Status)

None – TC signals just launched

Recently Closed Trades

10/06/14 USD/JPY Long Trade -130

*These are actual results of trades we have placed in our funded test account for the past week based on the trading

EUR/NZD – Is 1.6000 a Ceiling?

EUR/NZD – Is 1.6000 a Ceiling?

Chart Of The Day

Fundamentals

The kiwi has been under relentless pressure today as it tested key support of 8050 ahead of the key 8000 level. Despite the reelection of John Key and general broad stability of the political climate in New Zealand the sentiment towards the pair remains highly negative as it faces capital outflows. Today’s New Zealand Trade balance could be the key to the future direction of the pair as investors will want to see the country’s ability to generate exports. If the Trade numbers prove to be worse than expected they could put additional pressure on the unit. Meanwhile in Europe traders will get a look at the latest IFO survey. Markets already expect a weak reading but if the number falls even more than forecast it could downward pressure on the unit. On the other hand if the data is not as dour as anticipated then the Euro which already looks like it has made a bottom could stage a short covering rally and the EUR/NZD 1.6000 level will fall by the wayside.

Technicals

Technically EUR/NZD faces key resistance at 1.6000 but a break there opens up the run towards 1.6200 and possibly even 1.6500 on a longer time horizon. Meanwhile a break below 1.5800 turns the bias on the pair bearish again.

Is EUR/NZD Headed for 1.60?

Is EUR/NZD Headed for 1.60?

Chart Of The Day

Fundamentals

Both the euro and New Zealand dollar have performed poorly this week but over the past 5 trading days NZD has lost more than 2.5% of its value against the U.S. dollar while the euro lost only 0.6%. The decline in NZD was driven by a lower payout forecast from Fonterra, which has a direct impact on the country’s terms of trade and GDP as well any chance of additional tightening by the RBNZ this year. The slide in the euro on the other hand was driven by concerns that fresh sanctions on Russia could slow the Eurozone recovery. So in other words, one move is based on immediate economic implications and the other is based on the expectations of a future slowdown that may not transpire since the impact on trade will be limited. However this does not mean that we believe that EUR/NZD will not make it to 1.60. Further adjustment is expected in NZD and on Thursday, Eurozone consumer prices, German retail sales and unemployment are scheduled for release. If these reports surprise to the upside, EUR/NZD could extend its gains towards 1.60.

Technicals

On a technical basis, 1.5800 is a very significant resistance level for EUR/NZD. Not only did the pair find support near this level in March and May, but it is also the 23.6% Fibonacci retracement of the sell-off that began on December 27th. If EUR/NZD closes above this level on the daily chart, the next stop for the currency pair should be the 100-day SMA at 1.5865 and then 1.60. However if it fails at 1.58, there is no major support until 1.56.

Will EUR/NZD Continue to Fall?

Will EUR/NZD Continue to Fall?

Chart Of The Day

Fundamentals

The market’s voracious demand for New Zealand dollars drove EUR/NZD to a fresh 1 year low. There’s no bigger divergence in G20 monetary policy than the one between the Eurozone and New Zealand. This year, the European Central Bank was the only major policymaking body to cut interest rates, which compares to the Reserve Bank of New Zealand, who was the only one to raise rates. But past changes to monetary policy is not the reason why EUR/NZD dropped to fresh lows over the past 24 hours. Instead, weak Eurozone data and an optimistic outlook for New Zealand boosted the market’s expectations for ECB easing and RBNZ tightening. Both central banks have made it clear that they could continue on their current monetary policy course and the prospect of additional stimulus from the ECB and rate hikes from the RBNZ should keep EUR/NZD under pressure. On the basis of fundamentals, we expect EUR/NZD to drift towards 1.52 ahead of this month’s RBNZ rate decision.

Technicals

Taking a look at the weekly chart of EUR/NZD, the next level of support for the currency pair is 1.5393. If this level is broken, then there is no major support until the 2013 low of 1.5082. The downtrend in EUR/NZD remains intact as long as the currency pair holds above its former breakdown level of 1.5707.