Today’s Trades 02.20.2018 – EURUSD, USDCAD, GBPNZD, CHFJPY

Swing

*Good morning/afternoon everyone!*

The U.S. dollar is trading higher against all of the major currencies today but stock futures are pointing to a sharply lower open (of course that could change quickly) as the Dow and S&P 500 hover under key technical levels. This makes USD/JPY’s rally vulnerable to a pullback and puts further downside pressure on other major currencies. There are no major U.S. economic reports but 10 year yields have topped 2.9%. A softer German ZEW survey drove EUR/USD below 1.2350 but at the start of NY trade, the single currency is trying to claw higher. The strongest currency outside of the greenback is the New Zealand dollar which is holding steady ahead of today’s dairy auction. Prices have been moving higher and another positive read is needed to maintain the pair’s uptrend. GBP ran up to 1.4016 on reports from UK minister Davis that a end of year deal is in the cards but has fallen off its highs since then. AUDUSD hit a 4 day low, USD/CAD is finding resistance near 1.26 – whether a pullback happens from here hinges on the performance of U.S. stocks but at minimum, oil prices are moving up, supporting a decline in USD/CAD.

*The MAIN THEMES I see today are*

-EUR
+CAD
-GBP
+NZD
-CHF

*Trading Biases*

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

*Today’s Initial Trades*

Here’s the summary –

1. Sell CHFJPY at 114.57, Stop at 114.85, Target 114.29
2. Sell GBPNZD at 1.9988, stop at 1.9016, Target 1.8960
3. Sell EURUSD at 1.2346, Stop at 1.2374, Target 1.2318
4. Sell USDCAD at 1.2591, Stop at 1.2619, Target 1.2563

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

GBP/NZD to 1.84?

GBP/NZD to 1.84?

Chart Of The Day

GBP/NZD to 1.84?

GBP/NZD fell hard today – the move wasn’t much of a surprise as sterling was the day’s worst performer and the New Zealand dollar was the best. Cable is weaker because it is once again becoming clear how difficult Brexit negotiations will be – there’s still a lot of contention surrounding the Brexit bill with the UK refusing to pay a balance that could top $100 billion. The two sides are clearly preparing for tough negotiations, which begin formally June 19th. Cable has seen a very strong rally in anticipation of a large Tory win in the UK elections, but PM May’s lead has declined considerably and if she does not win an overwhelming majority her position at the bargaining table may be weakened.” In contrast, NZD is being supported by the recent improvements in data

Technically, GBP/NZD has broken below the 20-day SMA and if it drops below the May low of 1.8563, there’s a bit of support at 1.8515, the 23.6% Fib retracement of the 2015 to 2016 sell-off but ultimately the next stop should be 1.84.

Today’s Trading Plan 05.02.2017 – AUD/NZD, AUD/CHF, GBP/NZD

Swing

Good morning/afternoon everyone!

The U.S. dollar and European currencies are strong this morning with USD/JPY taking out 112. There was no specific data to catalyze the move but U.S. rates continue to creep upwards and that is helping the currency. UK and German rates are also higher. In contrast, AUD, NZD, and CAD are weak. The RBA left interest rates unchanged last night and failed to acknowledge the improvements in the economy, leading to weakness in AUD. Traders should watch New Zealand’s dairy auction this morning. Canadian yields and oil prices are up but the loonie continues to fall as USD/CAD takes aim at 1.37.

*The MAIN THEMES I see today are*

EUR, GBP strength
AUD, NZD weakness

*Currencies we plan on day trading and the direction*
*These could change during the day, but for now

We will be trading around these themes –

-AUD, -NZD
+GBP

*Trading Biases*

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

*Starting Trades*

OPENED AT MARKET AUDNZD Sell
ENTRY – 1.08640
STOP – 1.09140
TAKE PROFIT – 1.08340

OPENED AT MARKET AUDCHF Sell
ENTRY – 0.74730
STOP – 0.75230
TAKE PROFIT – 0.74430

OPENED AT MARKET GBPNZD Buy
ENTRY – 1.86837
STOP – 1.86337
TAKE PROFIT – 1.87137

GBP/NZD – Gunning for 1.8000?

*Top 5 Archive Members Only Chart Of The Day

This morning’s UK inflation report was hot, fueling expectations for more hawkishness from the Bank of England. The UK government could trigger Article 50 any day now, but until they do, rate hike expectations could drive GBP to 1.25. UK CPI printed at 2.3% versus 2.1% eyed while core reading rose to the key 2.0% level from 1.8% forecast. The core reading is now above the BoE’s target rate and was the real reason for the pound rally, as currency markets begin to price in the possibility of a rate hike.

The New Zealand dollar, on the other hand, could come under selling pressure on the back of the RBNZ rate decision. Since their last meeting in February, consumer spending has fallen, GDP growth slowed, the trade deficit widened while dairy prices declined. There was some strength in the services and manufacturing sectors but with the currency so strong, we don’t think that will be enough to ease the central bank’s concerns.

Therefore GBP/NZD has scope to rise further. The pair has no significant resistance until 1.7800-1.8000 corridor while support comes in at 1.7400

GBPNZD – Ready to Bounce?

GBPNZD – Ready to Bounce?

Chart Of The Day

GBPNZD is one of the most volatile pairs in the forex market, and yesterday was no exception to that rule as it dropped nearly 400 points in one day. And yet the looks ready to bounce as it approaches key support at the 1.7200 level.

The trade in GBPNZD is really a bet on the bounce in cable as kiwi remains moribund with a slight negative bias in the market. Sterling, however, has absorbed 3 attempts to take it below 1.2100 level and so far has been able to withstand all the selling. Although the prospect of hard Brexit hangs over the currency, the ebbs of flows of negotiation have a long way to go, but any upside surprise in data could create a squeeze in cable over the next few days. As long as 1.7200 holds GBPNZD remains a buy.

GBP/NZD – Aiming for 1.77

Chart Of The Day

GBP/NZD – Aiming for 1.77

On a fundamental and technical basis we believe that GBP/NZD is headed for further losses. Fundamentally sterling is weighed down by Brexit fears – over the last two weeks, there’s been a lot of talk that Article 50 will be invoked early next year and both sides appear unwillingly to concede on key terms. After 2 months of calm, this reminded everyone of how messy Brexit will be. In the coming weeks we expect GBP to remain under pressure as more headlines like these stifle rallies. NZD could also remain under pressure but is likely to outperform GBP. While the RBNZ made it clear this week that “further policy easing will be required,” they don’t meet again until November so between now and then, investors will still be attracted by New Zealand’s 2% carry. The sell-off in NZD/USD has also taken the pair to support at the 50-day SMA whereas the next key level for GBP/USD is not until the August low of 1.2866.

gbpnzd92616
Technically, we would like to highlight the 4 hour chart of GBP/NZD. Having hit a low near 1.76 on Tuesday, the currency pair has staged a strong recovery. However the presence of multiple moving averages above (50, 100 and 200-period) along with lower highs and lowers signal the potential of a deeper correction that should take the currency pair to at least 1.78 and possibly even 1.77. The daily chart also shows the bounce fading with significant resistance at 1.80.

GBP/NZD The Uptrend Remains in Place

GBP/NZD The Uptrend Remains in Place

Chart Of The Day

Cable has been a clear winner over the past few days as the much better than expected wage data and decent Retail Sales have revived talk of a possible BOE hike this year. After today’s dovish FOMC presser that is much less likely – the BOE is not going to front run the Fed when it comes to normalizing policy, but it nevertheless provides a bid for cable as the unit remains the only viable G-7 currency that could actually tighten policy in the foreseeable future.

In the meantime the kiwi continues to languish and even today’s big anti-dollar rally was quickly extinguished on the back of concerns from chairwoman Yellen that China’s slowdown is a problem. The RBNZ remains resolutely dovish and that means that rates on kiwi could go lower before the year end all of which keeps the GBP/NZD uptrend in place. 2.4000 remains the key support while 2.5000 is the next upside target for the bulls.

GBP/NZD to 2.06?

GBP/NZD to 2.06?

Chart Of The Day

Fundamentals

Considering that the British pound was one of the best-performing currency pairs against the dollar today next to the Japanese yen while the New Zealand dollar was the worst performing it is no surprise to see a sharp rally in GBP/NZD. There’s a good chance that the breakout movies on Monday will last through the rest the week with key UK and NZ data on the calendar. Given the recent upside surprise in UK manufacturing activity there’s a very good chance we could see a rebound in tomorrow’s industrial production report from the UK. Although the banks across Wall Street have been extending out there Bank of England rate hike expectations UK data has been relatively good lending support to GBP. NZD on the other hand has been hit hard by expectations for dovish measures from the RBNZ this week who is widely expected to lower their inflation forecast which would suggest that they may not raise interest rates in 2015. Dairy prices have fallen sharply and inflationary pressures around the world have been easing. On top of that growth in China has been slowing so the RBNZ certainly has reasons to grow more dovish. If that is case, the gains in GBP/NZD could extend to 2.06.

Technicals

GBP/NZD enjoyed a very strong rally on Monday taking out the key 2.04 level, which was a former support turned resistance. If the currency pair continues to move higher, we should see the rally extend to 2.06. However if the RBNZ fails to lower their inflation forecast, NZD recovers its losses and GBP/NZD falls back below 2.04, a move back to 2.0 becomes likely.

GBP/NZD – Ready to Take Out 2.0000?

GBP/NZD – Ready to Take Out 2.0000?

Chart Of The Day

Fundamentals

The kiwi is having a terrible day as another dairy auction has proven to be a disappointment with prices starting to fall once more. Tonight the market will be looking at the NZ employment figures where the estimate is for further improvement, but if the data misses the mark the pair could head towards the 8400 level as market will start to fear a possible reversal of course in the RBNZ to a rate cut rather than a rate hike. The recent decline in NZ economic fundamentals has shaken the bulls confidence and the pair is under heavy selling pressure. In UK on the other hand the data continues to remain robust and even if the BOE is not going to hike rates soon, it is nevertheless expected to be one of the first G-7 central banks to do so. All of this leaves the GBP/NZD cross open to further upside as the 2.0000 comes into view

Technicals

A very strong move today highlight’s s possible breakout above 2.0000 which could pave the way to a further rally above 2.0200. Only a break below 1.9700 would negate the bullish bias and turn the trade into sell once again.

GBP/NZD – At the Top of the Range?

GBP/NZD – At the Top of the Range?

Chart Of The Day

Fundamentals

This week the focus falls on central banks and no two events are more important than the RBNZ decision and the BoE minutes which are due one after the other. In New Zealand the question is will they or won’t they? Most analysts expect the RBNZ to hike to 3.50% and if they were to do so the kiwi could attract a fresh round of buying especially from yield starved Japanese. However the latest data form New Zealand suggests that the economic growth may be slowing and the Chinese are looking at aggressively diversify from the country’s main export – milk. That could lay the groundwork for RBNZ to halt its tightening for now which could hit the kiwi hard. Meanwhile in UK all eyes will be on the MPC minutes as traders will look for any sign that there is disagreement about the current state of accommodating monetary policy. If there is a hint that some members would like to tighten before 2014 is over, cable could get another boost in price. In short the GBP/NZD is prime for some volatility as the week proceeds.

Technicals

Technically GBP/NZD is nearing the top of its multi-month range with 1.9750 looking to cap the current move. A break higher could open a run to 1.9900 while a drop would target the lower end of the range as 1.9400