GROWTHACES.COM Forex Trading Strategies:
Trading Positions:
EUR/USD trading strategy: long at 1.1300, target 1.1620, stop-loss 1.1390
GBP/USD trading strategy: long at 1.5040, target 1.5250, stop-loss 1.5090
NZD/USD trading strategy: long at 0.7305, target 0.7500, stop-loss 0.7320
EUR/CHF trading strategy: long at 1.0160, target 1.0700, stop-loss 1.0520
Pending Orders:
USD/JPY trading strategy: sell at 118.60, if filled target 116.60, stop-loss 119.10
EUR/GBP trading strategy: buy at 0.7505, if filled target 0.7650, stop-loss 0.7450
EUR/JPY trading strategy: buy at 133.90, if filled target 137.00, stop-loss 133.00
GBP/JPY trading strategy: buy at 176.80, if filled target 180.00, stop-loss 176.00
AUD/NZD trading strategy: sell at 1.0610, if filled target 1.0380, stop-loss 1.0670
EUR/USD Likely To Rise Further Driven By Weaker U.S. Macro Data And Improving Risk Appetite
(we’ve raised our target to 1.1620)
[ul]
[li]January Euro zone Composite PMI stood at 52.6, higher than a preliminary estimate of 52.2 and December’s 51.4.
[/li][li]The services sector PMI rose to 52.7 from December’s 51.6, above the flash 52.3 estimate. The upturn remained fastest in Ireland, where output growth stayed close to December’s six-month peak. Spain saw the fastest increase in activity since August last year, while growth in Germany improved to a three-month high. Italy moved back into expansion territory, while French service sector moved in the opposite direction, falling for the fourth time in the past five months.
[/li][li]The PMI showed that the rate of job creation was very strong, especially in Germany, Spain and Ireland, and inched higher to a pace not seen since the middle of 2011, adding to signs of increasing optimism among employers about the year ahead.
[/li][li]The PMI showed prices charged recorded the largest monthly fall for nearly five years as a result of recent slump in international oil prices. However, lower oil prices will boost consumer spending power.
[/li][li]The January PMI reading is consistent with GDP rising by 0.3% in the first quarter. We see that lower EUR/USD is supportive for economic recovery in the Eurozone, while U.S. economy is slowing down slightly.
[/li][li]Euro zone retail sales expanded by 0.3% mom and 2.8% yoy in December (vs. median forecast of 2.0% yoy). It was the best year-on-year growth since March 2007. European Commission survey last week showed an improvement in consumer confidence in January to a six-month high. Many consumers appeared more confident about making major purchases and see prices falling over the next 12 months.
[/li][li]On the other hand, Tuesday brought us another weak data from the U.S. economy after Monday’s lower-than-expected ISM manufacturing reading. Factory orders declined 3.4% in December after a 1.7% drop in November. It was the biggest drop since a 10% plunge in August and marked the fifth straight month that orders have fallen.
[/li][li]Investors are waiting for the release of U.S. ISM non-manufacturing (today 15:00 GMT). The market expects a rise to 56.4 from 56.2 a month earlier, while our forecast is at 55.5. In our opinion the EUR/USD is likely to go higher after the data.
[/li][li]There were also some comments from central bankers yesterday. European Central Bank policymaker Jens Weidmann said dangerous deflation in the euro zone is unlikely. He added: “Dangerous deflation would be characterised by a downward spiral of falling prices, declining wages, consumer restraint and reduced investment by companies.”
[/li][li]Minneapolis Fed President Narayana Kocherlakota said yesterday that the Federal Reserve should consider restarting its controversial bond-buying stimulus if inflation does not start moving back to 2% goal. Narayana Kocherlakota is one of the most dovish policymakers and his comments will be probably ignored by the market. On the other hand, St. Louis Fed President James Bullard said the Fed should take the word “patient” out of its next policy statement. Neither Kocherlakota nor Bullard are voting FOMC members this year.
[/li][li]The EUR/USD rose strongly and stopped near the 20-dma at 1.1535 yesterday, slightly below our target of 1.1550. The rise was driven by higher oil prices and improving risk appetite. The EUR/USD eased today near 1.1440 but better Euro zone macro data and weaker U.S. figures make us stay bullish on the EUR/USD. We have raised the target and stop-loss of our EUR/USD long position.
[/li][/ul]
Significant technical analysis’ levels:
Resistance: 1.1534 (high Feb 3), 1.1652 (high Jan 22), 1.1680 (high Jan 21)
Support: 1.1336 (10-dma), 1.312 (low Feb 3), 1.1280 (low Feb 2)
NZD/USD Recovered From Multi-Year Lows
(we got long at 0.7305)
[ul]
[li]New Zealand’s jobless rate rose to 5.7% in the fourth quarter from 5.5-year low of 5.4% in the previous quarter and was much higher than the median forecast of 5.3%.
[/li][li]The economy added 28k jobs during the quarter. Employment growth was led by the technical, services and manufacturing sectors, but the jobless rate rose due an even bigger rise in the labor force. The participation rate jumped to 69.7%, the highest on record going back to 1986. Private sector wages rose 1.8% yoy in the fourth quarter.
[/li][li]RBNZ Governor Graeme Wheeler said the central bank expected to keep interest rates on hold for some time given that the economy remains strong while inflation eases, even as other central banks around the world have been easing policy.
[/li][li]Last week the RBNZ moved to a neutral policy stance as it said it expected to hold its cash rate at 3.5 percent “for some time” because of low inflation, while keeping the door open for a possible rate cut depending on data.
[/li][li]International milk prices rose while volumes dropped in this month’s first auction held by New Zealand’s Fonterra. Last week, it said it expected production for the rest of the season to the end of May would be down 3.3% because of the dry conditions. The auction results helped to lift the NZD/USD.
[/li][li]Last hours were very interesting for the NZD traders. The NZD/USD rate fell strongly after a rate cut in Australia on Tuesday. However, the rebound in oil prices and Fonterra’s auction’s results were supportive for the NZD. The NZD/USD rose to 0.7400 from yesterday’s low at 0.7177. The market was waiting, however, for dovish comments from RBNZ Governor Graeme Wheeler. The expectations were fueled by recent monetary easing in Australia and Canada. Some market participants expected some hints about possible rate cut, which, in our opinion, was unlikely. In our yesterday’s Forex Trading Strategies Summary we placed a buy order at 0.7305 and the order was filled during the Wheeler’s speech. The NZD/USD returned immediately above 0.7390 when the market interpreted RBNZ Governor’s comments as more hawkish than expected.
[/li][li]We are now NZD/USD long with the target at 0.7500. We expect that possible further rise in oil prices and improving risk appetite after ECB’s QE announcement will be supportive for further rises of the NZD/USD.
[/li][/ul]
Significant technical analysis’ levels:
Resistance: 0.7450 (high Feb 4), 0.7495 (high Jan 28), 0.7529 (high Jan 23)
Support: 0.7291 (low Feb 4), 0.7177 (low Feb 3), 0.7125 (low March, 2011)
USD/CAD: Loonie Supported By Oil Prices
(we stay sideways)
[ul]
[li]The Canadian dollar jumped and our USD/CAD long reached the stop-loss level at 1.2480 yesterday, as rally in crude oil made the market confident that prices have bottomed out. Canada is a major crude exporter, and its currency is highly correlated with oil prices (see our Correlation Matrix).
[/li][li]Oil prices began climbing earlier after British oil company BP became the latest petroleum producer to announce a reduction in capital expenditures, adding to expectations that spending cuts will help trim output and deplete some of the excess supply.
[/li][li]The Bank of Canada is widely expected to cut interest rates again as early as next month. However, if oil prices increase further, a cut may be questioned. That is why we prefer to stay sideways and do not buy USD/CAD at lowered levels. The short-term outlook is uncertain, but we still see scope for USD/CAD rising to above 1.3000 in the long term.
[/li][li]The USD/CAD traders should focus now on employment figures for the United States and Canada on Friday. In our opinion the U.S. data may be slightly weaker than market consensus that may result in a slight fall of the USD/CAD.
[/li][/ul]
Significant technical analysis’ levels:
Resistance: 1.2512 (low Jan 29), 1.2600 (psychological level), 1.2645 (hourly high Feb 3)
Support: 1.2353 (low Feb 3), 1.2314 (low Jan 22), 1.2286 (23.6% 1.0620-1.2800)
Source: Forex Trading Strategies