GROWTHACES.COM Forex Trading Strategies
Taken Positions
EUR/USD: short at 1.0625, target 1.0335, stop-loss 1.0710, risk factor **
USD/JPY: long at 121.10, target 123.55, stop-loss 119.60, risk factor *
USD/CHF: long at 1.0010, target 1.0300, stop-loss 0.9960, risk factor *
USD/CAD: long at 1.2680, target 1.2860, stop-loss 1.2580, risk factor **
AUD/USD: short at 0.7640, target 0.7340, stop-loss 0.7790, risk factor ***
NZD/USD: short at 0.7390, target 0.7130, stop-loss 0.7390, risk factor ***
EUR/GBP: short at 0.7080, target 0.6920, stop-loss 0.7190, risk factor **
EUR/CHF: long at 1.0670, target 1.0990, stop-loss 1.0570, risk factor *
AUD/NZD: long at 1.0460, target 1.0700, stop-loss 1.0340, risk factor ***
Source: Growth Aces Forex Trading Strategies
EUR/USD Stabilized After Two-Week Sell-Off
(short for 1.0335)
[ul]
[li] U.S. retail sales dropped 0.6% mom in February after declining 0.8% in January. The decline in sales last month was almost broad-based, suggesting that cold weather in the second half of February could have been a factor. It was the first time since 2012 that sales had dropped for three consecutive months. Retail sales excluding automobiles, gasoline, building materials and food services were unchanged after a 0.1% mom decline in January.
[/li][li] In February, automobile sales tumbled 2.5% mom. Sales at clothing stores were flat. Receipts at building material and garden equipment stores fell 2.3% mom and sales at restaurants and bars slipped 0.6% mom. There were also declines in furniture and electronic and appliances sales. Receipts at online stores, however, rose 2.2% mom. Sales at sporting goods and hobby shops increased 2.3% mom. A recent rise in gasoline prices lifted receipts at service stations, where sales rose 1.5% mom, the first increase since May.
[/li][li] Initial claims for state unemployment benefits declined 36k to a seasonally adjusted 289k for the week ended March 7. That unwound much of the prior two weeks’ increases, which had pushed claims well above the 300k mark.
[/li][li] U.S. import prices rose in February gained 0.4% mom after a revised 3.1% mom plunge in January. Imported petroleum prices rose 8.1% mom last month after tumbling 20.6% mom in January. Import prices excluding petroleum fell 0.4% mom in February after January’s 0.6% mom drop. Imported food prices dipped 0.2% mom after sliding 1.6% mom in January. There are still no signs of inflation pressure despite recovery in oil prices. Imported inflation data reflect the USD strength against the currencies of main trading partners. The strong USD will probably extend the period of inflation staying below the Feds 2% target. This may result in delaying interest rates hikes in the USA.
[/li][li] The EUR/USD rose yesterday after investors booked profits in an extended rally that has driven the USD to multi-year peaks this week. Weaker U.S. retail sales reading was an excuse to sell the USD. The weakness of the data resulted mainly from weather conditions and we can expect strong recovery in retail sales next month. Such one-off factors should be ignored by investors in the long term.
[/li][li] The EUR/USD sentiment looks to remain decidedly bearish with calls for parity in the medium term. The Fed is likely to signal its intention to raise interest rates soon by dropping a pledge to be “patient” in its forward guidance at next week’s policy meeting. The market expects the Fed to raise interest rates in June as a rapidly strengthening labor market and its eventual upward pressure on wages offsets lingering concerns about low inflation. However, further appreciation of the USD may be a barrier to further economic recovery in the USA and may cause a delay in raising rates. Fed Chair Janet Yellen said last month that the policy-setting committee “needs to be reasonably confident that over the medium term, inflation will move up toward its 2% objective” before it starts to raise interest rates.
[/li][/ul]
Significant technical analysis’ levels:
Resistance: 1.0634 (session high Mar 13), 1.0684 (high Mar 12), 1.0718 (high Mar 11)
Support: 1.0494 (low Mar 12), 1.0460 (low Jan 9, 2003), 1.0335 (monthly low Jan 2003)
GBP/USD: Profit Taken At 1.4810 After Dovish Carney
(stay sideways, considering getting short again at higher levels)
[ul]
[li] Bank of England Governor Mark Carney said BoE rate-setters should consider the risk that low foreign inflation and GBP’s strength might persist. He said: It may be appropriate to take into account persistent external deflationary forces arising from the combination of continued foreign low inflation and the protracted effects of sterling’s strength on the prices facing UK consumers if those forces were to intensify.
[/li][li] He added the pace and degree of the BoE’s rate hikes would be affected by foreign prices, Britain’s exchange rate, as well as domestic cost pressures. Carney said the Bank expected to make limited and gradual increases in rates over the next three years as inflation returned to target within two years, even though it fell to 0.3% yoy in January.
[/li][li] There are at least three BoE policymakers that are closer than Carney to voting for rate hikes (Weale, McCafferty and Forbes). Martin Weale said on Wednesday that the fall in oil prices had given the BoE only breathing space to keep interest rates on hold, while his colleague Kristin Forbes has warned inflation pressures could pick up quickly.
[/li][li] The reaction of the GBP/USD to dovish Carneys comments was very strong. BoE governor disappointed some investors who were positioning for a hike in early 2016. However, in our opinion it is too early to exclude a scenario of rate hikes in the United Kingdom early next year. It is still our baseline scenario.
[/li][li] We took profit on our GBP/USD short position opened at 1.5015 and closed at 1.4810.
[/li][/ul]
Significant technical analysis’ levels:
Resistance: 1.4897 (session high Mar 13), 1.4952 (hourly high Mar 12), 1.5029 (hourly high Mar 12)
Support: 1.4814 (low, Jul 9, 2013), 1.4803 (low Jun 23, 2010), 1.4688 (low Jun 22, 2010)
USD/CAD: Eyes On Canadian Jobs Report
(long for 1.2860)
[ul]
[li] A Statistics Canada report showed new home prices slipped 0.1% mom in January, the first decline since July 2010. Another Statistics Canada report showed the household debt-to-income ratio rose to a record high 163.3% in the fourth quarter. It was the third quarter in a row that disposable income increased at a slower rate than household debt. The Bank of Canada watches the measure closely for signs consumers may be overextended.
[/li][li] The Teranet-National Bank Composite House Price Index showed prices for existing homes, the largest segment of the Canadian market, rose 0.1% in February from January and were up 4.4% yoy.
[/li][li] The Bank of Canadas economist Rhys Mendes said the central bank is seeing signs of more demand for non-energy exports and business investment, which is crucial for a return to sustainable growth. He said the lower CAD was improving the competitiveness of production in Canada, which should further boost exports and eventually investment.
[/li][li] Investors are focused on Canadian jobs report today (12:30 GMT). We expect stronger fall of employment than the median market forecast after a strong jobs increase last month. Soft numbers will be good news for our long USD/CAD position.
[/li][li] We stay long at 1.2680 for 1.2860.
[/li][/ul]
Significant technical analysis’ levels:
Resistance: 1.2800 (high Mar 11), 1.2845 (high Mar 13, 2009), 1.2955 (high Mar 12, 2009)
Support: 1.2613 (low Mar 12), 1.2598 (low Mar 10), 1.2574 (low Mar 9)
