A very quiet overnight session of trade with the economic releases coming out from the UK in the form of a better than expected mortgage approvals and weaker consumer credit. The mixed results failed to materially factor into price action with market participants more keenly focused on developments within the global equity markets.
MORNING SLICES
Fundys – A very quiet overnight session of trade with the economic releases coming out from the UK in the form of a better than expected mortgage approvals and weaker consumer credit. The mixed results failed to materially factor into price action with market participants more keenly focused on developments within the global equity markets. Unfounded rumors that Chinese banks would have lending restrictions imposed sent drove Asian equities lower but US equity futures have since recovered somewhat and now only point to a marginally lower open. The Eur/Chf cross jumped some 30 points overnight after SNB Jordan came out saying that FX interventions had been effective and central bank would continue to be active. Elsewhere, the German IFO was in the news after a survey showed that economic activity may be suppressed by German bank’s restrictive lending practices. Meanwhile, Moody’s was out with a report on Spain which highlighted that although the economic model was badly hit, it was not permanently impaired. US mortgage applications have come in at -6.3% versus a previous print of +2.8%. All currencies are down against the buck with the Australian dollar the weakest major currency on the day thus far, while Kiwi is interestingly the top performing major currency. Looking ahead, durable goods (-0.7% expected) is set for release at 12:30GMT, while the Beige Book follows later in the day at 18:00GMT. Part 3 of the Bernanke PBS Town Hall Meeting is scheduled to air at 22:00GMT. Crude is lower on the day, while gold trades flat.
Quant –
For information on the above tables, please visit our Guide to Morning Slices Quant section
Techs - EUR/USD triggers hourly double top that should now open a fresh drop back into the lower 1.3900’s over the coming sessions. A break below 1.4100 should accelerate, while only back above 1.4305 negates. USD/JPY attempting to carve out lower top ahead of next downside extension through 91.75. Key levels to watch over the coming session comes in by 95.40 and 94.00. GBP/USD breaks down through recent consolidation lows to expose next support by 1.6310 further down. Back above 1.6500 today should be concerning for bears. USD/CHF showing decent follow through from Tuesday’s bullish reversal day with next resistance now coming in by 1.0820, above which opens a push back towards the key range highs at 1.1025. Intraday dips should be well supported ahead of 1.0650.
Flows – Asian and Russian offers in Cable. US investment bank offers being absorbed by UK clearer bids in Usd/Jpy. Asian central bank demand for Eur/Usd; Japanese, Middle Eastern and Russian offers.
Trade of the Day – Usd/Jpy: With the overriding trend still intensely bearish, and with the market recently failing ahead of the 50-Day SMA and strong internal trend resistance, we like the idea of looking to fade any rallies intraday in anticipation of deeper setbacks over the coming sessions. Tuesday’s bearish reversal day confirms bias and a lower top is now sought out below Tuesday’s high, ideally by 95.10. The 95.10 level coincides with the 78.6% fib retracement off of the latest high-lows along with the projected daily ATR high. [B]STRATEGY: SELL @95.10 FOR AN OPEN OBJECTIVE, STOP @96.10. RECOMMENDATION TO BE REMOVED IF NOT TRIGGERED BY NY CLOSE (5pm ET) ON WEDNESDAY.
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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.
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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