Fundys – The broad based USD selling from Friday has carried over into Monday trade, with Sterling standing out as an outperformer on the session after breaking to fresh 2009 highs to 1.6875 thus far. Although we saw some mixed results out from Barcalys and HSBC, the much better than expected PMI data helped to bolster gains after putting in an above 50 reading, the best since March 2008. Meanwhile, data was less impressive out from the Eurozone, with any better than expected PMI results out from Germany and the broader region being easily offset by the much weaker than expected German retails sales. Elsewhere, Swiss PMI managed to come in better than consensus estimates. The improved risk sentiment and higher global equity prices have also helped to rally the Yen crosses which all trade higher on the day. Meanwhile, commodities are also very well bid on similar correlations and market themes, with oil grabbing attention after breaking back above $70. Looking ahead, US ISM manufacturing (46.5 expected) and construction spending (-0.6% expected) area due at 14:00GMT.
Techs - EUR/USD likely to set fresh 2009 high on Monday with the market pressing back above 1.4300 thus far. The key levels to watch above and below come in by 1.4340 and 1.4205 respectively. USD/JPY tracking higher but confined to inside day price action thus far. Back under 94.50 required to accelerate declines, while inability to do so puts focus back on 95.90. GBP/USD has broken to fresh 2009 highs just shy of 1.6900 thus far. All eyes now on psychological barriers by 1.7000 above with only a break back below 1.6695 to take pressure off of the topside. USD/CHF still unable to break out of a very well defined consolidation with the market back to testing the recent trend lows below 1.0700. The key level to watch below comes in by the 2009 lows at 1.0590 with a break to open a fresh downside extension. A break above 1.0730 however will remove some of the downside pressure.
Flows – Asian central bank and short term fund buying of Usd/Jpy. Real money buying Cable. German name and 2 UK clearers on the bid in Eur/Usd. French bank demand for Eur/Gbp. Models still looking to buy Aussie.
Trade of the Day – Usd/Cad: Still dropping and we are still looking for an opportunity to buy. Our in-house proprietary Speculative Sentiment Index however, continues to show room for the market to drop with an overwhelming 4:1 ratio of retail traders long the pair. Nevertheless, daily studies are severely oversold and the risk at some point in the very near-term is for a significant upside corrective bounce. The daily ATR comes projects a potential daily low today just ahead of 1.0650 and we will be waiting with an order to buy on approach to the mid-figure. [B]STRATEGY: BUY @1.0660 FOR AN OPEN OBJECTIVE, STOP @1.0460. RECOMMENDATION TO BE REMOVED IF NOT TRIGGERED BY NY CLOSE (5PM ET) ON MONDAY.
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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