GROWTHACES.COM Forex Trading Strategies:
Trading Positions
EUR/USD: short at 1.1815, target 1.1620, stop-loss 1.1900
GBP/USD: short at 1.5110, target 1.4910, stop-loss 1.5180
USD/JPY: long at 119.15, target 120.80, stop-loss 118.30
USD/CHF: long at 1.0160, target 1.0330, stop-loss 1.0100
EUR/GBP: short at 0.7850, target 0.7700, stop-loss 0.7880
EUR/CHF: long at 1.2025, target 1.2090, stop-loss 1.1995
AUD/NZD: short at 1.0530, target 1.0200, stop-loss 1.0440
Pending Orders
USD/CAD: buy at 1.1740, if filled target 1.1990, stop-loss 1.1670
EUR/USD: Trading Strategies For Non-Farm Payrolls
(short at 1.1815, target 1.1620)
[ul]
[li] December US Non-Farm Payroll data later today (13:30 GMT) will be key event for the EUR/USD traders. The market expects 240k jobs (vs. 321k in November) and unemployment rate to edge down to 5.7% from 5.8%. We forecast a slightly lower reading of Non-Farm Payrolls of 228k and unemployment rate at 5.7%. The market is usually focused mainly on the headline reading. However, after a brief reaction of the EUR/USD rate to the headline data, investors will be deeply analyzing particular components of the jobs report.
[/li][li] In our opinion the most important component of the data from the Fed’s point of view will be average work week and hourly earnings. If average hourly earnings are at least 0.2% (median forecast) and the average hours worked at least maintains last month’s 34.6, it will be interpreted as supportive for private consumption. If hourly earnings and average work week data are higher than forecasts, investors could even strengthen their expectations for monetary policy tightening in 2015. This will result in further strengthening of the USD against the EUR and other major currencies, even if the headline figure is slightly below the median forecast of 240k.
[/li][li] We should also remind the ADP National Employment Report. It showed U.S. private employers added 241k jobs in December, beating the median forecast of 226k. November’s private payrolls were revised up to 227k from the previously reported 208k. Our research show that the correlation between ADP data and official figures of the Bureau of Labor Statistics is not very strong. That is why we should not raise our forecasts for Non-Farm Payrolls despite good ADP numbers on Wednesday.
[/li][li] The macroeconomic data from the Euro zone have been weak recently and numbers released on Friday by the Euro zone’s two biggest economies, France and Germany, only darkened the outlook for the Euro zone and the EUR.
[/li][li] German exports fell 2.1% in November, while imports pushed up 1.5%, narrowing the trade surplus to EUR 17.7 bn. A fall in exports by 0.2% was expected. Moreover, German industrial output decreased by 0.1% vs. the consensus forecast for a 0.4% increase. French industrial production fell 0.3% in November from October, falling short of expectations for a rise of 0.3% mom.
[/li][li] What EUR/USD trading strategy shall we take ahead of Non-Farm Payrolls reading? We got EUR/USD short at 1.1815. In our opinion the EUR/USD bears will be targeting to break below the 2015 lows of 1.1640. We set the take-profit level of our short position at 1.1620 and the stop-loss level at 1.1900.
[/li][/ul]
Significant technical analysis’ levels:
Resistance: 1.1848 (high Jan 8), 1.1897 (high Jan 7), 1.1969 (high Jan 6)
Support: 1.1754 (low Jan 8), 1.1640 (monthly low Nov, 2005), 1.1376 (monthly low Nov, 2003)
GBP/USD Higher Despite Weak UK Data
(short at 1.1510, target 1.4910)
[ul]
[li] The Bank of England kept interest rates unchanged at 0.5% after its first meeting of 2015. The decision was widely expected. The central bank also said it would reinvest GBP 4.35 bn of proceeds from a maturing January 2015 bond in its GBP 375 bn of quantitative easing asset purchases. The BOE has previously committed to reinvest such funds until it has raised interest rates some way above their record low.
[/li][li] Some central bank policymakers are concerned that interest rates may need to rise sooner rather than later to tackle a possible rebound in wage growth this year, as employment levels keep hitting new record highs. Two of the nine members of the BoE’s Monetary Policy Committee, Ian McCafferty and Martin Weale, voted for a rate rise between August and December. The BOE will publish voting records and reasons behind January’s policy decision on January 21.
[/li][li] British industrial output sank by 0.1% mom in November (a rise of 0.2% mom was forecast), extending October’s decline as oil and gas output dropped by more than 5% mom due to maintenance work at North Sea oil fields. Construction output fell by 2.0% mom in November vs. forecast of 1.2% mom rise.
[/li][li] Britain’s trade deficit offered better news. The deficit in goods narrowed to GBP 8.848 bn in November beating forecasts for it to narrow slightly to GBP 9.4 bn. The value of oil imports had fallen to their lowest since October 2010, in part due to cheaper oil prices. Goods export volumes in the three months to November recorded the strongest growth since July 2013 at 3.8%.
[/li][li] Good news came also from the British Chambers of Commerce’ quarterly economic survey. It showed manufacturing and services companies were in fairly confident mood about their prospects for 2015.
[/li][li] The GBP/USD recovered today despite weaker-than-forecast industrial output data. GBP/USD traders are waiting for U.S. Non-Farm Payrolls data. We got short yesterday at 1.5110, in line with our trading strategy and set the target at 1.4910. However, the next target for the GBP/USD bears could be even lower, at 1.4814, the 2013 low from July 9. Our trading strategy is to stay also EUR/USD short. The position was taken at 0.7850 and the target is 0.7700.
[/li][/ul]
Significant technical analysis’ levels:
Resistance: 1.5157 (high Jan 7), 1.5274 (high Jan 6), 1.5336 (high Jan 5)
Support: 1.5034 (low Jan 8), 1.5028 (low Jul 15, 2013), 1.4845 (low Jul 10, 2013)
USD/CAD: Buy On Dips, Medium-Term Outlook Bullish
(buy at 1.1740)
[ul]
[li] The CAD weakened slightly against the USD on Thursday. The USD/CAD moves are strongly correlated with oil prices (check our Correlation Matrix), as Canada is a major crude exporter. Global oil prices were little changed, with Brent crude just above 50 USD a barrel.
[/li][li] The USD/CAD traders will be focused on employment figures for December for the United States and Canada (13:30 GMT). The median forecast for Canada’s jobs data is 15k with the unemployment rate at 6.6%. Our expectations are much more optimistic – in our opinion the reading could reach as high as 29k with the unemployment rate at 6.5%. Such a good reading may give the CAD a boost. We forecast also slightly weaker than market consensus reading of U.S. Non-Farm Payrolls. As a result the USD/CAD is likely to fall slightly today.
[/li][li] Our trading strategy for the USD/CAD is to use lower levels to get long, as our medium-term outlook for his rate is still bullish. We placed our buy order at .1.1740. If the order is filled we will set the target at 1.1990 and stop-loss at 1.1670.
[/li][/ul]
Significant technical analysis’ levels:
Resistance: 1.1844 (high Jan 8), 1.1875 (high Jan 7), 1.1900 (psychological level)
Support: 1.1797 (low Jan 8), 1.1744 (low Jan 5), 1.1730 (low Jan 6)
Thank you for reading.
Growth Aces | Daily Forex Analysis, Forex Signals, Forex Trading Strategies and Forecasts for Forex Traders"