GROWTHACES.COM Trading Positions
EUR/USD: short at 1.2750, target 1.2530, stop-loss 1.2820
USD/CHF: long at 0.9590, target 0.9750, stop-loss 0.9450
USD/CAD: long at 1.1150, target 1.1290, stop-loss 1.1060
NZD/USD: short at 0.7880, target 0.7500, stop-loss 0.8000
EUR/CHF: long at 1.2085, target 1.2160, stop-loss 1.2045
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EUR/USD lower again after weak Euro zone data.
(we went short at 1.2750, in line with our strategy)
- Euro zone industrial production fell 1.8% in August against July for a 1.9% yoy decline. A fall by 1.6% mom was expected. The main factor behind the fall was a 4.8% drop in the output of capital goods.
- The decline mainly reflected a 4.3% in German production while French output fell slightly and Italy posted a modest rise. August’s fall was affected by the timing of German school holidays and a rebound is to be expected next month.
- ZEW's monthly survey of economic sentiment tumbled for a tenth consecutive month to -3.6. That was the weakest reading since November 2012. The negative reading means the majority of investors see German economic conditions deteriorating rather than improving over the next six months. The reading was much lower than the consensus forecast of 1.0. A separate gauge of current conditions slid to 3.2 from September's reading of 25.4, undershooting the consensus forecast for a reading of 18.0.
- The EUR/USD was quite volatile yesterday despite limited trading. The USD broadly collapsed at the end of American trading yesterday and opened at 1.2752 in Asia today. The EUR/USD hit the level of 1.2770. In line with the strategy of GrowthAces.com, we went short at the level of 1.2750. The EUR/USD traded down to 1.2714 before finding buyers again. Weak macroeconomic data from the Euro zone made the EUR/USD fell again. The target of our short position is 1.2530 and the stop-loss level is 1.2820.
Significant technical analysis' levels:
Resistance: 1.2770 (hourly high Oct 14), 1.2791 (high Oct 9), 1.2802 (30-dma)
Support: 1.2663 (10-dma), 1.2648 (200-hma), 1.2605 (low Oct 10)
GBP/USD: Dovish shift in BoE rate expectations after inflation data
(in our opinion outlook for the GBP/USD is bearish now)
- Consumer prices rose 1.2% yoy in September, compared with 1.5% in August as the prices of food and motor fuels both fell. A fall to 1.4% yoy was expected. An underlying measure of British inflation, which strips out increases in energy, food, alcohol and tobacco, rose by a 1.5% yoy in September slowing from 1.9% yoy in August. Data also released by the ONS on Tuesday showed that factory gate prices fell by 0.4% yoy, the biggest yearly fall since September 2009.
- The weak global growth, inflation backdrop and with falling energy prices is likely to weigh further on inflation over the coming months and there is a risk of inflation below 1% over the next few months. The view of first rate hike has been already moved to the turn of the second and third quarter 2015.
- Separate data from the Office for National Statistics showed house prices in Britain rose 11.7% yoy in August, unchanged from the increase in July.
- The GBP/USD broke below an 11-month low of 1.5943 struck earlier this month. The way to 1.5879 (low November 13, 2013) is open now. The outlook for the GBP/USD is bearish now and the rate is likely to go lower on rising expectations that interest rates’ hike will take place rather later than sooner.
Significant technical analysis' levels:
Resistance: 1.6089 (10-dma), 1.6095 (hourly high Oct 14), 1.6126 (daily high Oct 13)
Support: 1.5879 (low Nov 13, 2013), 1.5854 (low Nov 12, 2013), 1.5776 (low Sep 13, 2013)