GROWTHACES.COM Forex Trading Strategies
Taken Positions
EUR/USD: short at 1.1080, target 1.0850, stop-loss 1.1145, risk factor ***
USD/JPY: long at 122.50, target 124.20, stop-loss moved to 122.50, risk factor ***
EUR/JPY: short at 136.60, target 134.00, stop-loss 137.30, risk factor ***
AUD/NZD: short at 1.1380, target 1.1220, stop-loss 1.1445, risk factor **
Pending Orders
GBP/USD: sell at 1.5630, target 1.5450, stop-loss 1.5690, risk factor ***
USD/CHF: buy at 0.9360, target 0.9570, stop-loss 0.9280, risk factor **
USD/CAD: buy at 1.2465, target 1.2700, stop-loss 1.2370, risk factor **
AUD/USD: sell at 0.7720, target 0.7550, stop-loss 0.7810, risk factor **
NZD/USD: sell at 0.6800, target 0.6600, stop-loss 0.6890, risk factor **
EUR/GBP: sell at 0.7150, target 0.7020, stop-loss 0.7190, risk factor ***
EUR/USD: Focus Shifts On US Data Today
(short at 1.1080)
- One day after Greece became the first developed economy to default on a loan with the International Monetary Fund, Christine Lagarde suggested that Greece should move to reform its economy before its European creditors give it a break on its debt.
- The chairman of the Eurogroup, Jeroen Dijsselbloem, said that there could be no further discussion of credit for Greece until after Sunday's referendum.
- Greek Prime Minister Alexis Tsipras urged Greeks to reject an international bailout deal on Sunday. He said: “A No vote is a decisive step towards a better agreement that we aim to sign right after Sunday's result.” European Council President Donald Tusk responded in a tweet: "Europe wants to help Greece. But cannot help anyone against their own will. Let's wait for the results of the Greek referendum.”
- Traders were focused on strong US economic data released on Wednesday, which supported the view that the Federal Reserve could hike rates by September.
- US ISM manufacturing index rose to 53.5 from 52.8 the month before, the highest level since January. The reading was in line with our forecast and topped market expectations of 53.1.
- The ADP showed that US private employers added 237k jobs in June, the biggest gain since December and above the forecast for 218k. May private payroll gains were revised up to 203k from an originally reported 201k increase. The ADP figures came ahead of the US Labor Department's non-farm payrolls report today (not on Friday as usual), which includes both public and private-sector employment. We have raised our forecast for today’s non-farm payrolls to 245k vs .market consensus of 230k. In our opinion, strong non-farm payrolls should boost the USD today.
- US construction spending increased 0.8% yoy to an annual rate of USD 1.04 trillion, the highest level since October 2008. The reading was higher than the market forecast for a 0.5% gain. April's outlays were revised slightly to show a 2.1% gain instead of the previously reported 2.2% rise.
- The construction spending report added to robust data on employment, consumer spending, consumer confidence and housing, in suggesting that economic growth is gaining steam. Atlanta Federal Reserve's GDPNow forecast model showed the US economy was on track to expand 2.2% in the second quarter.
- Fed board member Lael Brainard said events like the sharp swing in US bond prices last October and earlier this year in the market for German bonds added to anecdotal evidence that markets for safest assets are less liquid than they had been. If true, she said, that could cause trouble in times of financial stress, if investors cannot freely buy and sell safe haven bonds at other than fire-sale prices.
- We went EUR/USD short at 1.1080. The target of our bearish position is 1.0850, slightly above May 27 low.
Significant technical analysis' levels:
Resistance: 1.1172 (high Jul 1), 1.1224 (10-dma), 1.1248 (high Jun 30)
Support: 1.0955 (low Jun 29), 1.0915 (low Jun 2), 1.0887 (low Jun 1)
NZD/USD At New 5-Year Low
(sell at 0.6800)
- The NZD/USD fell below 0.6700 for the first time in five years today. It also slumped to a near two-year low against AUD and the AUD/NZD reached today’s high at 1.1429.
- The reason for the NZD depreciation is a slide in dairy prices and strengthening expectations for more rates Reserve Bank of New Zealand cuts.
- The benchmark GlobalDairy Trade price index fell 5.9% at fortnightly auctions held on Wednesday by New Zealand dairy exporter Fonterra, posting its eighth consecutive decline and taking average selling prices to USD 2,276 per tonne, their weakest since July 2009. Offered volumes rose from the previous sale and we should expect prices would continue to struggle as supply from New Zealand picks up with the beginning of the milking season.
- On the other hand, global demand for dairy products has also fallen sharply in the past year. Slowing growth in China, the Middle East and some emerging countries has cooled demand for protein from their growing middle classes, while Russian import sanctions and increasing farmer output has ramped up global supply.
- The ongoing slide in global dairy prices has prompted Fonterra to forecast a payout price for the current season well below production costs for many farmers.
- The RBNZ lowered rates last month by 25 bps and is considered almost certain to follow up with another cut later this month. There is only a slight risk that the RBNZ will delay its cut because of strong fall in the NZD. We expect a rate cut on July 23, but the RBNZ may release a bit less dovish statement, without suggestion of further cuts.
- The NZD has been under pressure from growing signs of a slowing economy, deteriorating terms of trade driven by falling dairy prices, but also improving US economy and approaching Fed’s interest rates hikes. We have placed a sell NZD/USD order at 0.6800.
- We went short on the AUD/NZD at 1.1380, as we expect stronger AUD fall in reaction to today’s US non-farm payrolls, but this position is risky. The medium-term outlook on the AUD/NZD is slightly bullish and we are looking to switch to AUD/NZD long near our current target of 1.1220.
Significant technical analysis' levels:
Resistance: 0.6810 (high Jul 1), 0.6849 (high Jun 30), 0.6883 (high Jun 29)
Support: 0.6600 (psychological level), 0.6561 (monthly low May 2010), 0.6500 (psychological level)