Data out of the Eurozone overnight included unemployment coming in better than expected, and Eurozone CPI estimates which were weaker than forecast to put in the biggest decline in 13 years. In Switzerland, the Swiss KOF was released and surprised to the upside, which helped to weigh somewhat on the very well bid Eur/Chf. We are looking to buy Usd/Cad.
Fundys – Data out of the Eurozone overnight included unemployment coming in better than expected, and Eurozone CPI estimates which were weaker than forecast to put in the biggest decline in 13 years. In Switzerland, the Swiss KOF was released and surprised to the upside, which helped to weigh somewhat on the very well bid Eur/Chf. Another big story was the impressive GDP result from Sweden, which helped to drive the krona to the top performing currency spot on the day. Also generating some attention were the large Toshin funds issued out of Japan today, which undoubtedly helped to drive the yen crosses higher. Currencies in general were well bid against the buck, with the markets continuing to rebound from Wednesday’s sharp setbacks. Of the major currencies, Kiwi was the relative outperformer against the USD, while the Yen lagged. Looking ahead, GDP is the story of the day, with the indicator slated for release in Canada (-0.3% expected) and the US (-1.5% expected) at 12:30GMT. This is followed by Chicago PMI (43.0 expected) at 13:45GMT. US equities are tracking higher ahead of the open, while commodities are mixed.
For information on the above tables, please visit our Guide to Morning Slices Quant section
Techs - EUR/USD has broken back towards and slightly above the former hourly neckline of a double top formation that continues to project additional weakness. Ideally a lower top is now sought out below 1.4200 ahead of the next drop back below 1.4005 and into the 1.3900’s. USD/JPY continues to press higher but we still look for the downtrend to resume with a lower top favored by 96.00 and below the key 97.00 highs. Only back above 97.00 will force shift in outlook. GBP/USD price action remains very choppy and unpredictable but ultimately we look for a right shoulder to now carve out on the daily chart ahead of a drop back below 1.6000 and trigger of a major H&S topping pattern. As such any rallies above 1.6600 on Friday should be well capped. USD/CHF caught in some sideways consolidation following Wednesday’s impressive gains and we look for an eventual push higher through critical resistance by 1.1025 over the coming sessions. Any setbacks should now be well supported ahead of 1.0775.
Flows – Real money on the offer in Eur/Gbp. Swiss banks buying Eur/Chf. Spec accounts selling Aussie on rallies. Hedge fund selling Eur/Usd; German bank buying.
Trade of the Day – Usd/Cad: We have not abandoned our hopes of trying to get into this trade and will once again look to establish a long today on yet another dip. The downside pressure has been relentless with the market seemingly ignoring any oversold technical indicators in effort to see just how low we can go. We do however anticipate a major upside break in the near-term and at this point it is only a question of timing. As such, while we run the risk of potentially missing the move, we will continue to place our entry at lower levels using daily ATR analysis. Today, the projected low comes in by 1.0715 and we will look to get involved just ahead. [B]STRATEGY: BUY @1.0720 FOR AN OPEN OBJECTIVE, STOP @1.0470. RECOMMENDATION TO BE REMOVED IF NOT TRIGGERED BY NY CLOSE ON FRIDAY.
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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