Many investors were focused on exiting their Sterling positions overnight with the single currency getting hit the hardest in the light Friday summer trade. The Yen on the other hand was very well bid with the market looking to break down below rising trend-line support off of the July, 91.75 lows.
MORNING SLICES
Fundys – Many investors were focused on exiting their Sterling positions overnight with the single currency getting hit the hardest in the light Friday summer trade. The Yen on the other hand was very well bid with the market looking to break down below rising trend-line support off of the July, 91.75 lows. Lower equity futures and cross related Yen bids were seen as the primary driver behind the strength. The economic calendar was quiet with the only key release coming from the Eurozone after CPIcame out slightly weaker than expected, but hardly factored into price action. It is worth noting that the antipodeans managed to break to fresh yearly highs against the USD with Aussie stretching to 0.8480 and Kiwi extending to 0.6835. RBA Governor Stevens was out with some upbeat comments on the economy and also hinted at potential rate hikes down the road.Looking ahead, US CPI (1.6% expected) is due at 12:30GMT, along with Canada new motor vehicle sales (-1.0% expected) and manufacturing shipments (-0.3% expected). US capacity utilization (68.1% expected) and industrial production (0.2% expected0 follow at 13:15GMT, with Michigan confidence (69 expected) capping things off at 14:00GMT. US equity futures point to a lower open, while commodities are slightly bid.
[B]Quant –
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For information on the above tables, please visit our Guide to Morning Slices Quant section
Techs - EUR/USD inside day price action with key levels to watch above and below by 1.4330 and 1.4180 respectively. USD/JPY looks like it could be breaking down below rising trend-line support off of the recent 91.75 lows from early July. A break below 94.00 will help to confirm renewed bearish structure, while back above 95.50 now required to take the short-term pressure off of the downside. GBP/USD confined to previous daily range and a break above 1.6665 or back under 1.6470 will be required for clearer short-term bias. USD/CHF gains have stalled out ahead of 1.0900 and the market is in the process of retreating back into the middle of a very well defined multi-week range. Key levels to watch over the coming session come in by 1.0795 and 1.0675.
Flows – UK corporates on the bid in Cable; Asian and Middle East accounts along with US custodial on the offer. Asian central demand in Usd/Jpy; exporter offers.
Trade of the Day – Aud/Usd: Although the Australian economy has performed quite well throughout the global economic downturn, we contend that the recent appreciation in Aussie is nevertheless overdone and due for some corrective action. There have been a number of concerns with regard to Chinese growth prospects, and with the Australian economy so connected, any fallout in China ultimately should weigh on Aussie. Technically, we view the 0.8500 psychological barriers as a formidable spot to look to establish a short trade should the market run up to test the level. Any gains beyond should be limited and we look for a double top type formation to play out on the daily chart, with a near-term break back below neckline support at 0.8180 to open a measured move drop below 0.8000. [B]STRATEGY: SELL @0.8515 FOR AN OPEN OBJECTIVE, STOP @0.8715. RECOMMENDATION TO BE REMOVED IF NOT TRIGGERED BY NY CLOSE ON FRIDAY.
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P&L Update and Overview: Many of you have been asking for a way to better track trading results and open positions. In response to these requests and in an effort to be fully transparent, a simulated portfolio was been created in June to track and mirror all recommendations and trades. Below is a return on equity curve since inception on June 1, 2009, along with an open and closed position tracker. I am hopeful that this will make things easier for you all.
Additionally, please feel free to check out a [B]full profit and loss statement since inception on June 1, 2009[/B].
Written by Joel Kruger, Technical Currency Strategist for DailyFX.com
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Quant section prepared by David Rodriguez, Quantitative Strategist for DailyFX.com
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