The Pairs to Range Trade This Week - USD/CHF, USD/CAD and AUD/NZD

The Pairs to Range Trade This Week:
-USD/CHF
-USD/CAD
-AUD/NZD



Event Risk US and Switzerland
Trading Tip – Though USDCHF made a sharp swing last week, the pair is still within a downward trend channel. Therefore, stops on long positions should remain rigid. At the same time, price action should be monitored closely near when spot is hovering near the top node of the channel; and signs of a turn should lead to profit on half of the position. For guidance on price action, the direction of USDCHF may closely follow moves made in USDJPY. If the yen continues to give up ground against the dollar, it may signal to the currency market that the carry trade is back in play.
US – The US dollar faces significant event risk next week, with Monday starting with a bang as new home sales are predicted to rebound after last month’s dismal -16.6 percent reading while durable goods orders are estimated to recover from January’s drop of -7.8 percent. PCE Core is predicted to edge even higher, which may spark concerns that the Fed will be put in the complicated position of dealing with growing inflation and slowing expansion. The final reading of Q4 GDP could garner major attention as well, as the markets will respond swiftly to any upward or downward revisions. Manufacturing indicators should improve, but may still reflect broad pessimism on the sector with the Richmond Fed predicted to rise to -4 from -10 and Chicago PMI estimated to hit 49.5 from 47.9. Finally, sentiment reports in the form of consumer confidence and the University of Michigan survey are projected to show that optimism in the US is dwindling amidst rising oil prices, growing inflation, and mounting tensions with Iran.
Switzerland – Economic data out of Switzerland is expected to be mixed over the course of the next week, but much of Swissie’s price action will be contingent on the market’s attitude towards the carry trade and the result of the KOF leading indicator, which is estimated to rise slightly to 1.83. The figure will likely reflect solid consumption growth, as continued investment by Swiss companies in investment and hiring has kept unemployment near record lows. Nevertheless, if risk aversion shifts and traders decide to flock towards higher-yielding currencies, Swissie could be at a distinct disadvantage next week.

                [B]Data for March 26 – March 30

[/B]


Data for March 26 – March 30

Date

US Economic Date



Date

Swiss Economic Data

Mar 26

        New Home Sales        (FEB)

        

        Mar        27

        UBS Consumption Indicator        (FEB)

           Mar        27

        Consumer Confidence        (MAR)

        

        Mar        28

        KOF Swiss Leading Indicator        (MAR)

           Mar        28

        Durable Goods Orders        (FEB)

        

        Mar        29

        SECO 2007 Economic Forecasts        (MAR)

           Mar        30

        Chicago Purchasing Managers        (MAR)


Event Risk US and Canada
Trading Tip – Though EURUSD and USDCHF hold a very strong negative correlation, the two may diverge somewhat in the days to come. At present, EURUSD is very close to resistance, while USDCHF would have some territory to cover before reaching its own support. Therefore, a break higher in EURUSD does not necessarily mean range trades should be abandoned for USDCHF. Also, since the pair has just made a fresh break, Monday’s price action will be important imperative in determining whether this is a false breakout or if pair is prepared to extend on its technical breach.
US – The US dollar faces significant event risk next week, with Monday starting with a bang as new home sales are predicted to rebound after last month’s dismal -16.6 percent reading while durable goods orders are estimated to recover from January’s drop of -7.8 percent. PCE Core is predicted to edge even higher, which may spark concerns that the Fed will be put in the complicated position of dealing with growing inflation and slowing expansion. The final reading of Q4 GDP could garner major attention as well, as the markets will respond swiftly to any upward or downward revisions. Manufacturing indicators should improve, but may still reflect broad pessimism on the sector with the Richmond Fed predicted to rise to -4 from -10 and Chicago PMI estimated to hit 49.5 from 47.9. Finally, sentiment reports in the form of consumer confidence and the University of Michigan survey are projected to show that optimism in the US is dwindling amidst rising oil prices, growing inflation, and mounting tensions with Iran.
Canada – Economic data out of Canada is sparse next week, but the market’s focus will likely center upon industrial product price, which is anticipated to rebound in February on the back of surging commodities prices after contracting in the month prior. At the same time, GDP for the month of January is predicted to slow to 0.2 percent from 0.4 percent. While the weaker GDP release could put a drag on Loonie strength, a significant gain in industrial product prices will dominate as it may tilt the Bank of Canada’s bias even further to the hawkish side.
Data for March 26 – March 30



Data for March 26 – March 30

Date

US Economic Date



Date

Canadian Economic Data

Mar 26

        New Home Sales        (FEB)

        

        Mar        30

        Industrial Product Price        (FEB)

           Mar        27

        Consumer Confidence        (MAR)

        

        Mar        30

        GDP (MoM)        (JAN)

           Mar        28

        Durable Goods Orders        (FEB)

        

        

        

           Mar        30

        Chicago Purchasing Managers        (MAR)

Event Risk Australia and New Zealand
Trading Tip – For a read on volatility and the width of the range, the standard carry trade pairs should be monitored (USDJPY, NZDJPY, AUDJPY). If these pairs take off on another swift trend, the gains or losses will translate to intensified moves in the AUDNZD. From a technical perspective, the pair is currently in the middle of its range and is facing support with a 50-day SMA and a rising trendline. If spot breaks through these levels, it could lead to a quick drop to 1.1220. If the long entry conditions should be met on the same bar that broke through the 50-day SMA, a long entry should be deferred until the second daily close above 1.1220.
Australia – The economic calendar for Australia is remarkably thin next week, with only New Home Sales and Private Sector Credit on tap. Both indicators are relatively unimportant given their second-tier status, but major changes from the month prior could add a little volatility to Aussie trade. New Home Sales rose 5.8 percent last month and could slip in the February release as lofty interest rates may finally deter potential buyers. The same factor may impact Private Sector Credit, which surged 1.8 percent in January, as the average Australian consumer is already highly leveraged.
New Zealand – New Zealand’s economic calendar is chock full next week, with trade data, sentiment, and GDP all on tap. The trade deficit is anticipated to narrow on gains in export growth, which will likely be attributed less to increased demand and more to rocketing commodities prices. Both Westpac Consumer Confidence and NBNZ Business Confidence could take a hit as the increasingly hawkish bias of the Reserve Bank of New Zealand may have only managed to drum up fears that interest rates – which are already at a record high – could rise again in coming months. However, Q4 GDP is forecasted to surge 0.9 percent after rising a mild 0.3 percent during the month prior. Such a result would be extremely bullish for the New Zealand dollar, as the RBNZ will be anxious to cool such rapid expansion and could lead them to seriously consider another round of monetary policy tightening.
Data for March 26 – March 30



Data for March 26 – March 30

Date

Australian Economic Date



Date

New Zealand Economic Data

Mar 26

        HIA New Home Sales        (FEB)

        

        Mar        25

        Trade Balance        (FEB)

           Mar        29

        Private Sector Credit        (FEB)

        

        Mar        27

        Westpac Consumer Confidence        (1Q)

           

        

        

        Mar        29

        Gross Domestic Product        (4Q)

           

        

        

        Mar        29

        NBNZ Business Confidence        (FEB)


                Pair

        USDCHF

        USDCAD

        AUDNZD

           Date        Added

        Mar-16

        Mar-23

        Mar-02