Today’s Trades 04.24.2018 – EURUSD, AUDCAD, AUDJPY, GBPJPY

Swing

*Good morning/afternoon everyone!*

After yesterday’s sharp gains, today’s moves can be best described as consolidation. The dollar is holding firm but many of the major currencies are positioning for a relief rally. Whether that happens or not will determined by Treasury yields, which are pulling back slightly at the start of the NY session. So far, 10 year rates have yet to breach 3% which is the key level to watch. Euro fell on the back of a weaker German IFO report but recovered all of its losses after bouncing off 1.22. Sterling found a bid from stronger fiscal finances but GBPUSD needs to rise above 1.3965 for the positive momentum to accelerate. There’s no specific explanation for why the New Zealand dollar is the weakest currency but AUD and CAD are vulnerable to short covering if U.S. yields fail to extend higher today. For the U.S., new home sales, consumer confidence and the CaseShiller house price index are scheduled for release. While new home sales could benefit from yesterday’s existing home sales jump, confidence could falter as geopolitical tensions in April rattle the markets.

*The MAIN THEMES I see today are*

+EUR
+GBP
+AUD
-JPY

*Trading Biases*

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

*Today’s Initial Trades*

Here’s the summary –

1. Buy AUDCAD at .9770, Target .9742, Target .9798
2. Buy EURUSD at 1.2214, stop at 1.2186, Target 1.2242
3. Buy AUDJPY at 82.78, Stop at .82.50, Target 83.06
4. Buy GBPJPY at 151.83, Stop at 151.55, Target 152.11

Close ALL open day trades by 10:20AM NY / 15:20 GMT

GBPJPY to 146?

GBPJPY to 146?

Chart Of The Day

Sterling was the day’s worst performer, losing nearly 1% of its value against the U.S. dollar. Brexit negotiations have taken a turn for the worse and could quickly turn into a political crisis for Prime Minister May. The EU released a draft of its Brexit agreement and in it they proposed a “common regulatory area for Ireland after Brexit. May responded by saying that “no UK prime minister could ever agree” to a separate customs agreement for Northern Ireland. This has been a serious area of contention and potential deal breaker, although the EU has invited the UK to come up with other solutions. The draft Brexit agreement also brings back the issues surrounding the European Court of Justice. The UK doesn’t want to be obligated to the ECJ’s decision but the EU wants disputes over Brexit to be settled by a joint committee. In a nutshell, the EU isn’t budging on their initial demands and therefore all of this is a setback for Brexit negotiations. Unfortunately Prime Minister May’s speech on Friday isn’t going to instill any confidence in her ability to get a deal done. UK negotiators will continue to work with the EU on reaching a deal and the main focus on Friday will be how amenable she is to their terms. With U.S. stocks ending the day at their lows, we expect further weakness in sterling, particularly against the Japanese Yen. Manufacturing PMI numbers are scheduled for release on Thursday and based on the drop in the CBI index, softer activity is expected.

Technically, GBP/JPY has broken below the 200-day SMA and has fallen back below the first standard deviation Bollinger Band. The next stop should be 146.00

GBPJPY – Back to the Upside

GBPJPY – Back to the Upside

Chart Of The Day

Cable received a dose of good news today when it was revealed that the EU Parliament may consider “special status” for the UK – a massive change from European’s original position that would make Brexit much more palatable for UK economy. While all of this remains speculation, the news helped lift sterling towards the 1.4000 level and if tomorrow’s UK Labor data proves supportive, the pair could challenge the 1.4100 figure by day’s end.

Meanwhile, tomorrow will also see the release of Feb minutes which are likely to maintain a hawkish bias and provide further support to the nascent rally in USDJPY.

All of this could prove especially positive for GBPJPY which took out the 150.00 figure in today’s trade and looks to be at the start of multi-day rally that could take it to 155.00

GBPJPY – Headed to 153.00?

GBPJPY – Headed to 153.00?

Chart Of The Day

GBPJPY finds itself at the intersection of the two biggest stories this week – the US payrolls data tomorrow and the Brexit negotiations with EU. The pair was extremely volatile today jumping up and down at every positive or negative headline and could remain so until the end of week’s trade, but should developments follow the scripts of the bulls, the pair could skyrocket through key resistance at the 153.00 level taking out the yearly highs.

If UK and Ireland can come to terms the prospect of a soft Brexit is sure to increase sending cable to a test of post-Brexit highs above the 1.3600 level, that in turn could lift GBPJPY towards 155.00 especially if tomorrow’s NFP show strong wage growth. The one-two confluence of positive factors could send the pair to fresh yearly highs. Of course, headline risk works both ways and the pair could tumble hard below 150.00 if both stories disappoint.

Today’s Trades 11.29.2017 – EURUSD, AUDUSD, GBPJPY, CADJPY

Swing

*Good morning/afternoon everyone!*

Right out of the gate, the best performing currency this morning is sterling, which traded higher against all of the major currencies. It is struggling to extend higher at the start of the NY session but with UK yields up 7bp this morning, a further rally is likely. The greenback is holding bid as well, but the move is being overshadowed by the strength of GBP and stability of EUR. As this morning’s UK and Eurozone economic reports were slightly weaker, the strength of both currencies is purely a function of the market’s renewed interest in European assets. The commodity currencies are mostly lower with the exception of NZD which continues to be driven higher by short covering. German CPI is due for release at 13 GMT followed by US GDP revisions and later the Beige Book report. While all of these numbers could have a meaningful impact on EUR and USD, the thunder could be stolen at any moment by headlines in Washington. We believe that the prospect of tax reform will keep the USD bid and we are also looking for a positive outlook in the Beige Book. Dudley, Yellen and Williams speak today and they are likely to remind us that another rate hike may be necessary.

*The MAIN THEMES I see today are*

+USD
+EUR
+GBP
-AUD
-JPY

*Trading Biases*

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

*Today’s Initial Trades*

1. Bought GBPJPY at market now 149.58, Stop at 149.30, Target 149.86
2. Sell AUDUSD at market now .7578, Stop at .7606, Target .7550
3. Buy CADJPY at 86.98, Stop at 86.70, Target 87.26
4. Buy EURUSD at 1.1844, Stop at 1.1816, Target 1.1872

Close ALL open day trades by 10:20AM NY / 15:20 GMT

GBP/JPY to 152?

GBP/JPY to 152?

Chart Of The Day

GBP/JPY to 152?

Sterling turned out to be the best performing currency this past week thanks to a beginning of the week and end of week rally. There was actually very little in the way of U.K. data except for Friday when the currency was propelled higher by stronger industrial production and trade balance. There was also no progress on Brexit talks though Prime Minister May has grown increasingly conciliatory with talks that she could be willing to pay the EU the entire Brexit bill and possibly even more to secure a better trade deal. The EU on the other hand hasn’t been very cooperative and so Brexit developments still need to be watched carefully going forward. Next week will be a busy one for sterling with labor, inflation and retail sales reports scheduled for release along with speeches by a number of Bank of England officials including Governor Carney. If the data is good, it will propel the currency higher, taking GBP/JPY up with it. The U.S. dollar will be affected by 3 distinct factors in the coming week politics, economics and monetary policy. There’s no doubt that politics will be the primary driver but with 6 Federal Reserve Presidents speaking, the prospect of rate hikes could also affect how the greenback trades. Retail sales and consumer prices are also scheduled for release and investors will be eager to see if last month’s sharp increase in jobs translated into more spending. While we believe that rate hike talk could lift the greenback, lower gas prices and zero wage growth in October along with the drop in consumer sentiment means spending may be restrained. So on balance, we expect a mildly positive boost from Fed speak and U.S. data. Politics on the other hand is always difficult to predict.

Technically, GBP/JPY has done a great job of holding above the 50-day SMA near 148.70. If it breaks above 150 (and it looks like it will), the next stop could be 152. However if it sinks below 148.50, we could see losses extend as far as 147.00

Today’s Trades 10.25.2017 – NZDUSD, EURUSD, GBPJPY

Swing

*Good morning/afternoon everyone!*

Its another mixed day for the U.S. dollar, which is trading lower against European currencies and higher versus the Japanese Yen and comm dollars. AUD and NZD are singing to their own tunes with weaker data and political troubles hampering their gains. CAD on the other hand remains weak ahead of the Bank of Canada’s monetary policy announcement with USD/CAD breaking above 1.2700. GBP is benefitting from stronger than expected Q3 GDP and the EURO is holding bid ahead of Thursday’s European Central Bank monetary policy announcement. We’re finally beginning to see some big moves in the FX markets with many EUR and GBP crosses hitting multiyear highs driven by the divergence between the economic and monetary policy outlooks for Europe vs. Canada, Australia and New Zealand. Looking ahead we expect these divergences to continue.

We’ll be live trading Bank of Canada’s rate decision with everyone beginning at 9:45 AM NY / 13:45 GMT. Usual daily webinar link.

*The MAIN THEMES I see today are*

+USD
+EUR
+GBP
-AUD
-NZD

*Trading Biases*

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

*Today’s Ideas*

1. Sell NZDUSD at market now .6884, Stop at .6914, Target .6864
2. Buy EURUSD at market now 1.1778, Stop at 1.1748, Target 1.1798
3. Buy GBPJPY at 151.21, Stop at 150.91, Target 151.41

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

Today’s Trades 10.10.2017 – EURUSD, USDCAD, AUDCHF, GBPJPY

Swing

*Good morning/afternoon everyone!*

The U.S. dollar is trading lower across the board and this weakness drove EUR/USD beyond 1.18 and GBP/USD above 1.32. However as we start the North American session, both of these currencies are a bit softer yet the decline in U.S. rates should keep these uptrends intact. These currencies are also supported by data with Germany reporting a larger trade balance and the UK reporting faster industrial and manufacturing production growth. The U.S. dollar on the other hand is lower on fresh concerns about North Korea. Apparently NK told Russia they have an intercontinental missile capable of traveling 3000 km which would put it within reach of US territory. The commodity currencies are up across the board on dollar weakness and higher commodity prices. There are no U.S. economic reports on the calendar today but Fed President Kashkari speaks today along with Bank of Canada Deputy Governor Wilkins.

*The MAIN THEMES I see today are*

+EUR
+GBP
+CAD
-AUD

*Trading Biases*

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

*Today’s Ideas*

1. Buy EURUSD at 1.1780, Stop at 1.1750, Target 1.1800
2. Sell USDCAD at 1.2515, Stop at 1.2545, Target 1.2495
3. Sold AUDCHF at .7600, Stop at .7630, Target .7580
4. Buy GBPJPY at 148.25, Stop at 147.95, Target 148.45

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

GBPJPY – Back to 142.00?

GBPJPY – Back to 142.00?

Chart Of The Day

GBPJPY staged a major reversal today falling more than 150 points in the wake of weaker than expected US ISM Non-Manufacturing report and unexpectedly dovish BoE. UK central bank gave no signs that it intends to hike rates anytime soon, in fact suggesting that it will not tighten policy until 2018 at the earliest. This surprised the market especially in light of all the hawkish rhetoric pre-meeting. The final MPC vote was 6-2 against and that means that cable is likely to have run out of catalysts to rally further.

Meanwhile, the drop in the employment component of the ISM suggests that tomorrow’s NFP data could be soft or at very least that wage growth will be tepid. That, in turn, could put more pressure on USDJPY and send the pair below the 110.00 figure for good.

All of this combines for a very bearish outlook on GBPJPY which has now set a series of lower highs and if the pair breaks the 144.00 barrier it could quickly head to 142.00

GBPJPY Through 146?

GBPJPY Through 146?

Chart Of The Day

Of all the major currencies the weakest today is the British pound. The Bank of England caught the market by surprise with their dovishness last week and the market believes that this week’s economic reports will reinforce their concerns. 1.3000 is a very important resistance level for GBP/USD and without a hawkish BoE, the currency pair may have a difficult time exceeding this rate. Although we believe most of this week’s U.K. economic reports will beat, investors could eye these reports with caution. We don’t expect to be in the GBP/JPY trade for long and will reevaluate before tomorrow’s UK inflation reports. We have chosen to sell GBP vs. USD/JPY because U.S. data continues to miss. Manufacturing activity in the NY region turned negative in the month of May and this follows Friday’s softer retail sales and inflation reports. Rate hike expectations have fallen to 93.8% form 100% as a result and this could lead to further weakness in USD/JPY.

Technically GBP/JPY has a lot of resistance at or underneath this month’s high near 148.00. The most significant is the 61.8% Fib retracement of the 2011 to 2015 rally at 147.30. The December high and this month’s high above 148 also signal a potential double top at a level that coincides with the 100-month SMA. We expect GBP/JPY to drop below 146.00 and test 145.00

GBPJPY – Looking Better Bid

GBPJPY – Looking Better Bid

Chart Of The Day

Cable completely reversed course today on a much more hawkish than expected BOE rate decision which included a single vote for a rate hike. Despite some clear slowdown in UK economic growth monetary policy officials are clearly eager to move back to normalization and that helped to put bid underneath sterling for the whole day.

Meanwhile, USD/JPY drifted lower today but appeared to have found a bottom the 113.00 figure leaving GBPJPY in a consolidative position. Although GBP/JPY has been in highly compressed low volatility zone for more than a month, there is a discernable upward pattern to the pair as evidenced by the slightly rising RSI slope. A break above the 141.00 level could signal a major move up.

Part of the reticence in USD/JPY has been due to relatively muted consumer confidence readings, so tomorrow’s U of M data looms large and if it beats, could provide the fuel for a move up in the pair.

GBP/JPY to 150?

GBP/JPY to 150?

Chart Of The Day

GBP/JPY to 150?

The Bank of England’s monetary policy announcement is tomorrow and we believe the central bank will be hawkish. Although this morning’s U.K. labor market report was mixed with employment falling for the first time in more than a year for the three months to October, average hourly earnings rose strongly and the unemployment rate held steady at 4.8%. More importantly, the following table below highlights the widespread improvements in the U.K. economy since their last monetary policy meeting. Retail sales rose strongly in October, wage growth accelerated, consumer prices are on the rise and the PMI composite index increased, reflecting stronger economic activity. Stocks have also performed extremely well, which should give Governor Carney the confidence to tout the improvements in the U.K. economy and reiterate the central bank’s warning that they have only limited tolerance for an overshoot of inflation. At the same time, the U.S. dollar soared on the back of today’s FOMC rate decision. No one was surprised by the Fed’s 25bp rate hike but the dot plot forecast shows policymakers looking for 3 rate hikes in 2017. This view is more aggressive than the 50bp move they forecasted back in September and single handedly sent USD/JPY above 116. Fearing that Janet Yellen would downplay this forecast, traders refrained from driving the pair above 117 until after the Fed Chair began to speak and when she called the extra quarter point hike a “very modest adjustment” they realized that she was not going to refute this view. This very line along with her confidence in the economy sent the U.S. dollar and Treasury yields sharply higher. So from a technical and fundamental perspective, we believe GBP/JPY is headed much higher.

Taking a look at the GBP/JPY chart, it is already trading near a 6 month high. There’s a little bit of Fib resistance right above current levels near 147.25 but the main resistance level is just under the 100-month SMA at 149.95.