GROWTHACES.COM Forex Trading Strategies
Taken Positions
USD/JPY: short at 124.15, target 122.20, stop-loss 125.10, risk factor **
USD/CAD: short at 1.2490, target 1.2250, stop-loss moved to 1.2490, risk factor **
AUD/USD: long at 0.7655, target 0.7900, stop-loss moved to 0.7725, risk factor **
NZD/USD: long at 0.7160, target 0.7350, stop-loss 0.7060, risk factor ***
EUR/CHF: long at 1.0320, target 1.0510, stop-loss moved to 1.0320, risk factor **
CHF/JPY: long at 131.10, target 133.70, stop-loss moved to 132.10, risk factor **
Pending Orders:
EUR/USD: buy at 1.1060, if filled – target 1.1320, stop-loss 1.0960, risk factor **
GBP/USD: buy at 1.5240, if filled – target 1.5500, stop-loss 1.5150, risk factor ***
EUR/GBP: buy at 0.7215, if filled – target 0.7370, stop-loss 0.7160, risk factor **
EUR/JPY: buy at 137.10, if filled – target 140.30, stop-loss 135.85, risk factor **
EUR/CAD: buy at 1.3700, if filled - target 1.4000, stop-loss 1.3620, risk factor **
GBP/JPY: buy at 189.40, if filled – target 191.40, stop-loss 188.50, risk factor ***
EUR/USD: Caution Ahead Of ECB, Greece And US Non-Farm Payrolls
(buy at 1.1060)
- Federal Reserve board member Lael Brainard said the US economy's recent poor performance might be more than transitory, as the full impact of weak consumer spending, low investment and the high value of the USD become apparent. In her opinion current headwinds from broad, including the risks associated with a Greek default and a slowdown in China, may persist for some time. Brainard's speech adds significantly to the impression that the Fed will be not in a hurry to raise rates. However, we do not change our forecast that still points to a hike in September. In our opinion the forthcoming US macroeconomic data should show signs of improvement in economic activity. We expect also significant acceleration of economic growth starting from the beginning of 2016. That is why a hike at September meeting is justified.
- On the other hand, Eurozone PMI data showed that business growth lost a little momentum last month. The final Eurozone PMI composite posted 53.6 in May, down from 53.9 in April, but above the earlier flash estimate of 53.4. Output rose in both the Eurozone manufacturing and service sectors during May, with rates of expansion slowing in both cases. Employment rose for the seventh consecutive month in May, with the pace of jobs growth hitting a four-year record. Firms have been cutting prices since April 2012 but did so last month at the weakest rate in nearly a year.
- Eurozone retail sales rose in April by 0.7% mom, in line with expectations, and 2.2% yoy vs. a 1.7% yoy rise in March. This increase was led by strong growth in sales of food, drink and tobacco.
- The number of unemployed in the Eurozone fell for the seventh consecutive month in April, as expected. The 130k drop was sufficiently large to reduce the unemployment rate to 11.1%, its lowest level in more than three years, from a downwardly revised 11.2% in March.
- The European Commission, the European Central Bank and the International Monetary Fund agreed on the terms of a cash-for-reform deal to be put to Greece in a bid to conclude four months of debt negotiations. It was not clear whether the leftist government of Prime Minister Alexis Tsipras, which put forward a rival plan and has vowed not to accept more austerity, would accept the creditors' plan. Eurogroup chief Jeroen Dijsselbloem said: “We are not far from reaching a deal.” Dijsselbloem noted that there is no a specific proposal, but a wide package on budget, public administration, pensions and the labour market.
- Nikos Filis, the spokesman for the ruling Syriza party's lawmakers, said Greece will not make a June 5 loan repayment to the International Monetary Fund if there is no prospect of an aid-for-reforms deal with its international creditors soon.
- Investors will be focused on the press conference of the European Central Bank President Draghi after central bank rate-setting meeting today. First of all, the central bank will release its new macroeconomic forecasts. The updated set of forecasts is unlikely to show significant changes from three months ago. The short-term outlook is moving broadly in line with the ECB’s expectations. The GDP growth forecast for 2015 is likely to be confirmed at 1.5% and inflation forecast will be probably revised slightly up due to a rise in oil prices. An upward revision in inflation forecast should support the EUR.
- The ECB is also likely to discuss the recent wave of sell-offs in the fixed income market. There is a risk that ECB President Draghi may sound worried on the recent developments in bonds market. On the one hand, the ECB should be satisfied with the normalization of long-term rates to the levels that reflect improving growth and diminishing deflation fears. On the other hand, Draghi will probably reiterate that the central bank stands ready to counter any unwarranted tightening in financial conditions that may threaten the inflation target.
- We took profit on our EUR/USD long position at 1.1140 yesterday. The short-term view for the EUR/USD is unclear ahead of the ECB meeting, the resumption of Greece austerity discussions with EU leaders in Brussels and US non-farm payroll data on Friday. We have placed our buy order at 1.1060 as we see rising chances for Greece deal.
Significant technical analysis' levels:
Resistance: 1.1189 (session high Jun 3), 1.1195 (high Jun 2), 1.1208 (high May 22)
Support: 1.1100 (psychological level), 1.1079 (100-dma), 1.1020 (hourly low Jun 2)
AUD/USD: GDP Data Cooled Expectations For Monetary Easing
(stay long)
- GDP expanded by 0.9% qoq in the first quarter, up from 0.5% qoq the previous quarter. The data were much better than the market consensus of 0.7%. Final consumption expenditure went up 0.5% qoq and gross fixed capital expenditure fell 1.2% qoq. Annual GDP growth of 2.3% was still the slowest since late 2013, weighed by a retreat in mining investment and sharply lower prices for many of the country's resources. The structure shows that there are signs of a rotation in growth away from mining and resources to other sectors of the economy.
- Australia's quarterly performance was ahead of most of its rich world peers, beating the UK's 0.3%, a 0.4% gain in the EU and a contraction in the United States.
- The RBA was looking for growth of 0.5-0.6% for this and next quarter, so higher-than-expected reading for the first quarter makes further RBA easing unlikely. We keep our forecast that the RBA will not change interest rates this year.
- Better GDP reading pushed AUD/USD above 0.7800. The nearest resistance level is at 0.7839 now, daily high on May 26. Further developments on the AUD/USD depend on the outcome of the Greek crisis debt and Friday’s US jobs report. We have raised the stop-loss level of our long position to 0.7725 and kept the target at 0.7900.
Significant technical analysis' levels:
Resistance: 0.7839 (high May 26), 0.7900 (psychological level), 0.7931 (high May 22)
Support: 0.7737 (hourly low Jun 2), 0.7667 (hourly low Jun 2), 0.7604 (low Jun 2)
Source: Growth Aces Forex Trading Strategies