GROWTHACES.COM Forex Trading Strategies
Taken Positions
EUR/CAD: long 1.3480, target 1.3700, stop-loss moved to 1.3480, risk factor **
CHF/JPY: long at 129.10, target 131.40, stop-loss moved to 129.10, risk factor **
AUD/JPY: long at 95.60, target 98.80, stop-loss 94.60, risk factor **
Pending Orders
EUR/USD: sell at 1.0965, if filled – target 1.0740, stop-loss 1.1020, risk factor **
USD/JPY: buy at 122.20, if filled – target 124.05, stop-loss 121.35, risk factor **
GBP/USD: sell at 1.5470, if filled – target 1.5260, stop-loss 1.5560, risk factor **
USD/CHF: buy at 0.9410, if filled – target 0.9680, stop-loss 0.9295, risk factor **
USD/CAD: buy at 1.2330, if filled – target 1.2570, stop-loss 1.2240, risk factor ***
EUR/USD: Short-Term Outlook Bearish, But EUR Likely To Appreciate Later
(sell at 1.0965)
- US Federal Reserve Vice Chairman Stanley Fischer said the central bank should weigh the impact of its policy decisions on global economies and should expect spillovers back to the US economy once it starts raising interest rates. He added that the Fed would calibrate policy based on its domestic objectives of fostering full US employment and 2% inflation.
- Finance ministers of the G7 meet on Thursday and Friday in the German city of Dresden. The United States is likely to press Europe at this meeting to reach a deal on funding-for-reforms with Greece. Running short of cash to pay public sector salaries, pensions and debt obligations, senior members of Prime Minister Alexis Tsipras's government have said openly that Greece does not have the money to pay EUR 300 million to the International Monetary Fund on June 5.
- The US Commerce Department said yesterday non-defense capital goods orders excluding aircraft, a closely watched proxy for business spending plans, rose 1.0% last month after an upwardly revised 1.5% increase in March. The so-called core capital goods orders were previously reported to have increased 0.6% in March. The increase in core capital goods offers cautious optimism that business spending outside the energy sector will pick up in the coming months and support manufacturing, and the broader economy, after a dismal first quarter. Total orders for durable goods slipped 0.5% mom, in line with expectations.
- New US single-family home sales increased 6.8% to a seasonally adjusted annual rate of 517k units. March's sales pace was revised up to 484k units from the previously reported 481k. The market expects a reading of 510k.
- The EUR/USD broke below 55-dma at 1.0931. The EUR/USD fell below 1.0882 (61.8% fibo of 1.0521-1.1468 rise) yesterday, which was an important bearish signal. The risk of further fall to the daily cloud base at 1.0738 is higher now. The EUR/USD may even test late April lows near 1.0660. That is why we have switched to EUR-selling strategy now.
- Our medium-term expectations remain unchanged. We still forecast a gradual rise in the EUR/USD later this year. September Fed rate hike should be priced in soon and the process of narrowing bond yields between US and Germany (and other Eurozone countries) is likely to be continued. That is why we will probably switch again to EUR-buying strategy if the rate falls near April lows.
Significant technical analysis' levels:
Resistance: 1.0981 (high May 26), 1.1062 (low May 20), 1.1118 (100-dma)
Support: 1.0864 (low May 26), 1.0860 (low Apr 28), 1.0785 (low Apr 24)
USD/JPY: Short-term Outlook Bullish, Medium-Term View Unclear
(buy at 122.20)
- Bank of Japan Deputy Governor Kikuo Iwata said the timing for achieving the bank's 2% inflation target has been somewhat delayed from its initial projection. But he said that with the underlying trend of inflation improving steadily and wages on the rise, Japan will likely hit 2% inflation around the first half of next fiscal year, beginning in April.
- Minutes of the April 30 BOJ meeting showed three of the nine board members wanted to allow themselves more time to hit the target or water down the commitment. Many BOJ board members said risks to consumer prices are tilted to the downside due to uncertainty about long-term inflation expectations, consumer spending, and the output gap.
- The changed the time frame for achieving 2% inflation at the meeting to around the first half of fiscal 2016, which begins in April. Previously, the BOJ's official view was that it could achieve its target sometime around fiscal 2015. Many investors still see that forecast as too optimistic and expect the bank to ease policy again later this year. In our opinion the BOJ will not expand its QQE programme.
- BOJ board members agreed that the risks to economic growth are balanced but they warned that growth could slow temporarily due to a nationwide sales tax increase scheduled for the start of fiscal 2017. Members agreed that a tight labour market and gains in wages should support consumption, but there were doubts about how quickly this would happen.
- Our short USD/JPY hit the stop-loss yesterday and we have switched our strategy to buy USD/JPY at 122.20. In our opinion better Japan’s macroeconomic data this week could a good opportunity to buy USD/JPY on dips. The market is again in “the USD takes it all” mode. There have been some signs of improvement in the last few days of data on the US economy, along with comments by US central bankers shoring up expectations that the Federal Reserve can consider raising rates in the second half of this year. The medium-term outlook on the USD/JPY is mixed. If our order is filled we will set the target near 124.00 but we do not see the potential for stronger gains now.
Significant technical analysis' levels:
Resistance: 123.33 (high May 26), 123.67 (high Jul 9, 2007), 124.14 (high Jun 6, 2007)
Support: 122.04 (high Mar 10), 121.45 (low May 25), 120.64 (low May 22)
USD/CAD: Eyes On BOC Decision Today
(buy at 1.2330)
- The Bank of Canada meets today and is widely expected to keep interest rates unchanged at 0.75%. With no press conference, markets appear to face little risk of surprise from the central bank today.
- BOC Governor Stephen Poloz's recent comments suggest we should expect rather an upbeat statement. Poloz has recently said he was fairly pleased with the insurance rate cut the BoC made in January. He highlighted a number of positive trends, including a rebound in key exports outside the oil patch and a decline in long-term unemployment.
- There has only been one month's US data unaffected by weather and very little Canadian April data, which should serve as a source of caution. We can still expect “data dependency”, albeit with a cautiously optimistic outlook due to recent slew of stronger US data/positive revisions. Canadian data came in a tad above BOC forecast but not enough to shift policy.
- We are looking to go long on the USD/CAD at 1.2330 due to broad USD strength that adds to pressure on oil prices.
- Later this week investors will be focused on Canadian GDP data (Friday).
Significant technical analysis' levels:
Resistance: 1.2569 (high Apr 15), 1.2603 (high Apr 14), 1.2645 (high Apr 13)
Support: 1.2304 (low May 26), 1.2276 (low May 25), 1.2172 (low May 21)
Source: Growth Aces Forex Trading Strategies