Sample Category Title

USD/CHF - 1.0145

Original strategy :

Buy at 1.0110, Target: 1.0210, Stop: 1.0075

Position : -

Target :  -

Stop : -

New strategy  :

Buy at 1.0110, Target: 1.0210, Stop: 1.0075

Position : -

Target :  -

Stop : -

Dollar’s intra-day breach of previous resistance at 1.0146 confirms recent erratic upmove from 0.9861 has resumed and bullishness remains for this move to extend further gain to 1.0175-80, then towards 1.0200-10, however, near term overbought condition should prevent sharp move beyond previous chart resistance at 1.0248, risk from there is seen for a retreat later.

In view of this, would not chase this rise here and would be prudent to buy dollar on pullback as 1.0100-10 should limit downside. Only break of indicated support at 1.0073 would suggest an intra-day top is formed instead, risk weakness to 1.0040-45 but reckon support at 1.0009 would remain intact. 

GBP/USD - 1.2196

New strategy  :

Stand aside

Position : -

Target :  -

Stop : -

As cable has remained under pressure after meeting renewed selling interest at 1.2301, suggesting near term downside risk remains for recent decline from 1.2706 to extend further weakness to 1.2170-75 but reckon 1.2150 would limit downside due to loss of downward momentum and 1.2120-25 should hold, bring another rebound later. 

In view of this, would not chase this fall here and would be prudent to stand aside in the meantime. Above the Kijun-Sen (now at 1.2231) would bring recovery to the Ichimoku cloud (now at 1.2261-69), break there would suggest an intra-day low is formed, bring test of said resistance at 1.2301 which is likely to hold from here . 

EUR/USD - 1.0575

Original strategy  :

Buy at 1.0535, Target: 1.0635, Stop: 1.0500

Position : -

Target :  -

Stop : -

New strategy  :

Buy at 1.0535, Target: 1.0635, Stop: 1.0500

Position : -

Target :  -

Stop : -

Although the single currency retreated after rising to 1.0640 yesterday and consolidation with initial downside bias is seen for weakness to 1.0560, reckon downside would be limited to 1.0540-45 and bring another rebound later, above said resistance at 1.0640 would extend the erratic rise from 1.0493 lo for retracement of early decline to 1.0660-65 (50% Fibonacci retracement of 1.0829-1.0493) and possibly towards resistance at 1.0680, however, price should falter well below 1.0700-05 (61.8% Fibonacci retracement).

In view of this, we are looking to buy euro on dips. Below 1.0510 would abort and risk retest of 1.0493 but only break there would shift risk back to the downside and signal recent decline from 1.0829 has resumed for further selloff to 1.0470 and then towards previous support at 1.0454.

USD/JPY - 113.99

Original strategy  :

Sell at 114.50, Target: 113.35, Stop: 114.80

Position :  -

Target :  -

Stop : -

New strategy  :

Sell at 114.50, Target: 113.35, Stop: 114.80

Position :  -

Target :  -

Stop : -

As the greenback recovered after finding support at 113.56 yesterday, suggesting consolidation with initial upside bias would be seen and corrective bounce to 114.30-35 cannot be ruled out, however, if our view that a temporary top formed at 114.75 last week is correct, upside should be limited to 114.50-55 and bring another decline later, below said support at 113.56 would bring retracement of recent rise to 113.20-25 (50% Fibonacci retracement of 111.69-114.75), however, downside would be limited to 113.00 and 112.84-86 (previous resistance and 61.8% Fibonacci retracement), bring rebound later.

In view of this, we are looking to sell dollar on recovery for such move as 114.50 should limit upside, bring another decline. Only above said resistance at 114.75 would abort and signal the rise from 111.69 has resumed and extend gain to 114.96 (previous resistance) but price should falter well below resistance at 115.38.

GBPUSD: The pair faces further weakness following its continued downside pressure. Support lies at the 1.2150 level where a break will turn attention to the 1.2100 level. Further down, support lies at the 1.2050 level. Below here will set the stage for more weakness towards the 1.2000 level. Conversely, resistance stands at the 1.2250 levels with a turn above here allowing more strength to build up towards the 1.2300 level. Further out, resistance resides at the 1.2350 level followed by the 1.2300 level. On the whole, GBPUSD continues to face downside threats but with caution.

The Euro found itself under renewed selling pressure during trading on Monday following reports of former Prime Minister Alain Juppe confirming that he was not ready to run in the French presidential election. Markets simply acknowledged this fresh development as potentially heightening the chances of Marine Le Pen winning the elections which consequently exposed the Euro to further downside losses on Tuesday. Sentiment remains firmly bearish towards the Euro moving forward and the growing threat of a possible "Frexit" challenging the future of the European Union should limit future gains.

Although the economic fundamentals of Europe have repeatedly displayed signs of recovery, the persistent uncertainty over the French elections continues to leave investors jittery. While inflation in the Eurozone has reached the ECB's golden 2% target, the central bank may adopt a passive stance by keeping monetary policy unchanged on Thursday amid the ongoing political uncertainty.

From a technical standpoint, the EURUSD remains heavily pressured on the daily charts. Although the pair currently resides in a wide 150 pip range, weakness below the 1.0500 support could encourage a further selloff towards 1.0350.

Yen remains a friend

The ongoing Brexit woes, elections in Europe and Trump developments have made political risks dominant market themes for the first quarter of 2017. Uncertainty has boosted appetite for safe-haven assets with the Japanese Yen slowly becoming a trader's best choice. Risk aversion may intensify further in the coming weeks and as such may boost Yen's attraction ultimately uplifting its value. With the Yen likely to appreciate, markets will be observing how the Bank of Japan reacts to the increased volatility as the violent prices swings could impact business sentiment in Japan's economy.

A strengthening Dollar from the prospects of higher US rates combined with Yen's resurgence amid risk aversion has left the USDJPY in a tough tug of war. The USDJPY remains in a wide range on the daily charts with prices bouncing between 115.00 and 112.50. Although risk aversion could encourage bearish investors to drag the USDJPY back towards 112.50, a strong NFP on Friday should entice bulls to send the USDJPY towards 115.00.

Sterling trades below 1.2200

Sterling descended to a seven-week low below 1.2200 during Tuesday's trading session as the Brexit anxieties haunted attraction towards the currency. Investors seem edgy ahead of a second vote to Britain's upper house of parliament on granting Prime Minister Theresa May the power to trigger the formal Brexit negotiations. Sterling weakness could be a recurrent theme moving forward with the buying sentiment towards the currency remaining frighteningly low ahead of the Article 50 invoke.

The Sterling/Dollar has found itself under increased selling pressure on the daily charts with the breakdown below 1.2200 opening a path lower towards 1.2100.

Currency spotlight – Dollar

The rising confidence over the Federal Reserve raising US interest rates this month continues to support the Greenback. From a technical standpoint, the Dollar Index fulfils the prerequisites of a bullish trend on the daily charts as there have been consistently higher highs and higher lows. A decisive break and daily close back above 102.00 could encourage a further incline higher towards 102.50. Bulls should maintain control as long as the new higher low at 101.25 is not breached.

The Kiwi has struggled against the USD in recent days, but its travails are showing up on the crosses as well.

The New Zealand is in danger of going from "hero to zero" as we say down under. The Kiwi has given back almost all its Trump-fatigue driven gains of 2017 against not only the USD, but also a number of other currencies via the crosses. There is no one particular reason why everyone's favourite G-10 yielder seems to have fallen out of favour, rather a combination of factors.

The RBNZ has recently stated that it was comfortable with its current monetary settings and was still not looking at hikes until late 2018 early 2019. This was quite a surprise to many in the domestic market, although my experience there is they are always hawkish on rates anyway. This leads us to the elephant in the room, the U.S. Federal Reserve. Having wrong-footed the market by being universally hawkish into what was supposed to be a non-event March FOMC, precisely the opposite has happened. All we need now is for Friday's Non-Farm Payroll number to come in around the 190,000 expected and next week should be a done deal. Bond yields have firmed, and a narrowing interest rate differential will undermine the Kiwi although it won't be alone there in 2017.

Diminishing political risk, most especially in Europe and the glimmer of some actual detail on economic policy by the Trump administration seems to have sapped Kiwi's haven status. People may laugh at this, but it has merit. If you want to put your money away somewhere far away from the troubles and earn an actual yield on it, you could do a lot worse than New Zealand. My partner and I have just put the Trump hedge on in fact, and bought a small farm down there so consider this facts from the horse's mouth!

Regarding commodities, New Zealand's tend to be soft, not hard. Think of it this way, Australia digs gigatonnes of iron ore, copper ore, and coal out of barren patches of red dirt each year and sells it all to the Chinese. New Zealand's tend to come out of or are made of animals called Daisy, sheep (sheared or chopped up), fish and trees., i.e., soft. The rally in iron ore, copper et al. has dramatically changed Australia's terms of trade. Meanwhile, dairy prices, in particular, have softened or peaked.

This leads us to tonight's Global Dairy Auction. (GDT) This is a VERY closely watched number as Dairy is New Zealand's largest export. The weekly auction since Christmas has all been either flat to -5% in price terms. Tonight it is expected to be somewhere around -10% by the street with optimal growing conditions meaning Daisy the cow is producing a lot of dairy products.

Both the IMF and Moody's waded in today about household debt and the property market, both saying they present a large negative risk to New Zealand in the event of a "shock." Finally, the Reserve Bank of New Zealand (RBNZ) stuck the knife in this morning, announcing a bank capital review which may or may not result in the banks being required to raise more capital.

So overall many factors seemed to be conspiring to pluck the Kiwi's feathers, and this has been reflected in its relative performance on the currency markets.

NZD/USD

Testing an ascending support line that goes back to August 2015 at 6970. The next support being 6866 the December low. Below this, opens 6670 on a technical basis.

Resistance is at 7100 and then 7125/50 containing the 55,100 and 200-day moving averages.(DMA) Behind this, we see a series of daily highs at 7240 and then the long-term descending resistance line at 7390.

NZDUSD Daily

AUD/NZD

A less dovish RBA today and higher ore prices, as discussed above, sees the cross move higher again. Some readers will know that I am constantly expounding the dangers of going short AUD/NZD under or near 1.0300 and this chart shows why. From a technical point of view, it always seems to eventually lead to a rally above 1.1000 and many tears from the parity bugs. The cross has come a long way trading at 1.0885 as I write. From a technical point of view, though, it still looks to have legs.

The resistance area at 1.0665/75 has been broken and becomes support and a major pivot level. Below this, we have the 28th Feb low at 1.0618 and then the 1.0525/50 region. This contains the 55,100 and 200 DMA's. Long term support is at, you guessed it, 1.0300!

Resistance is at the 1.1045 area followed by the 1.1330/45 area.

AUDNZD Daily

NZD/JPY

A huge double top is in place at 83.80. NZD/JPY also closed below support at 80.43 and the 100 DMA at 80.00. These three levels all become resistance.

Interim support is at 78.20, followed by the long-term trendline at 77.40 and then the 200 DMA at 77.00.

NZDJPY Daily

NZD/CAD

Let's split this into two parts. I guess the thing to note is that given that Canada has perhaps the world's most dovish central bank governor at the moment, the Kiwi is sitting just above technical support against the Loonie.

Starting with the obvious, NZD/CAD is hovering just above a long-term ascending support line at 9346. From a technical basis, a daily close below opens a move to the next long-term support line at 9240.

Resistance is at 9400 and 9420, the 55/100 DMA's, then 9475, the 200 DMA, followed by 9655.

NZDCAD Daily

Part 2 is more interesting with what appears to be a head and shoulder formation on the cross. The neckline is the 2nd support at 9240. Measuring the neckline to head gives a distance of 770 points. So technically a break of the neckline could yield a move from 9240 to 8470. Better technicians than I are welcome to discuss.

EUR/NZD

EUR/NZD has been in a descending wedge pattern for the past year, which should be no surprise as we look at the events of 2016. The lines themselves, I confess, are not as exact as I would prefer, but the trend has been clear nevertheless. What is also evident, from a technical perspective, is the breakout from this long-term downtrend in the last few days.

EUR/NZD has broken the top of the wedge at 1.4840, the 55 DMA at 1.4880 and the 100 DMA at 1.4980, these all become support.

The move could imply higher levels yet, with initial resistance at 1.5285, a previous daily high and the 200 DMA. This is followed by another series of daily highs at 1.5515.

EURNZD Daily

Summary

From a technical basis, the Kiwi has broken to the downside against many major currencies. What is interesting is that the price action of the last few days has seen this breakout happen almost simultaneously across the board. Off all the G-10 currencies wizened traders will know that the Kiwi can break hearts (and profits), better than most. Nevertheless, due to the confluence of factors outlined above, the move should be respected. Traders will be closely watching tonight's Global Dairy Auction to see if the Kiwi gains some respite, or it loses more of its feathers.

Tuesday March 7: Five things the markets are talking about

Despite geopolitical tensions in Korea, lower 2017 growth target in China, and Trump's wiretap accusations, the U.S reflation trade remains somewhat intact with 10-year Treasuries gaining +4bps yesterday, briefly touching an intraday high of +2.50% during the session. Even the mighty dollar has steadied against G10 currencies in early European trade.

There seem to be no more doubts about a rate hike from the Fed next week (Mar. 14-15). It's the accompanying policy statement that equity investors should be most interested in, it will provide the market with more clues about the speed of subsequent futures rises.

Expect Friday's non-farm payroll (NFP) to also play a big part in solidifying a hike next Wednesday. Anything close to expectations and its a slam-dunk for next Wednesday, a slip and money-market dealers will be second guessing themselves.

Note: Employers probably added around +190k workers to payrolls, in line with the average over the past six-months and a sign of steady job growth.

1. Stocks rally peters out

Investors betting that the global economy is strong enough to withstand an increase in borrowing costs have supported global indices to print record highs. However, the market now seems intent to seek a new catalyst to push equities any further.

In Japan, the Nikkei share average edged down (-0.2%) overnight with investors deterred mostly by geopolitical tensions after yesterday's North Korean missile tests. The broader Topix traded flat.

In Hong Kong, stocks were firm on tech share strength and property rebound. The Hang Seng index rose +0.4%, while the China Enterprises Index gained +0.6%. In China, tech stocks also supported indices. The blue-chip CSI300 index ended up +0.2%, while the Shanghai Composite Index gained +0.3%.

In Europe, equity indices are mixed. Financials are trading generally negative in the Eurostoxx, while commodity and mining stocks are supporting the FTSE 100.

U.S stocks are set to open in the red (-0.2%).

Indices: Stoxx50 -0.1% at 3,385, FTSE +0.1% at 7,359, DAX +0.1% at 11,972, CAC-40 -0.3% at 4,959, IBEX-35 -0.2% at 9,782, FTSE MIB -0.2% at 19,407, SMI flat at 8,664, S&P 500 Futures -0.2%.

2. Oil prices hold steady, eyes on economic data

Oil prices are little changed overnight, with investors searching for direction as concern over rising U.S. shale output is being negated by OPEC's production cuts.

Brent crude is down -9c, or -0.1% at +$55.92 a barrel, while West Texas Intermediate crude has fallen -6c, or -0.1% to +$53.14 a barrel.

Expect investors to take their cues from this week's crude inventory reports and tomorrow's import and export data from China.

Note: Russia and Iraq said yesterday that it was too early to discuss if the pact by OPEC and non-OPEC members should be extended beyond May.

Gold prices have edged lower (-0.1% to +$1,224.86) as the USD consolidates. The yellow metal is hovering above its two-week low print ($1,222.51) from last Friday amid signals of a hike in rates in the U.S. next week.

3. Expect wild swings in U.S T-bills this month

Dealers are forewarning that this month's U.S T-bill market will be rather volatile as the outstanding stock of bills will fall by nearly -$100B between now and March 15, as the Treasury cuts its cash position in preparation for the mid-month debt ceiling reset. This will then be preceded by a surge in bill supply in the final two-weeks.

Yesterday's T-bill auction showed a jump of +0.25% in yield in the 3-month tender (average yield +0.745%) as the market prices-in to discount next week's rate hike. The 6-month tender was also up by +15.5bps (average yield +0.835%).

Elsewhere, the Reserve Bank of Australia (RBA) left its Cash Rate Target unchanged at +1.50% (as expected) and maintained its policy rhetoric that global economic conditions have "improved over recent months." Governor Lowe reiterated that a rising AUD ($0.7593) could "complicate economic transition" and also expects Aussie headline inflation to pickup this year.

4. Sterling getting pounded

Ahead of the U.S open, the pound has fallen to its lowest level in more than seven-weeks against the USD and the EUR.

GBP/USD has dropped to £1.2198 and EUR/GBP has rallied to €0.8679 – the pounds weakest level since the third week of Jan. Whom to blame? Aside from Brexit fears, a British Retail Consortium (BRC) survey overnight showed that U.K. retail sales fell last month. This is raising concerns that the U.K's important consumer sector is cutting their spending in response to higher prices caused by a weak pound since the Brexit vote. Also hurting the pound is this morning's Halifax data, which revealed weaker-than-forecast house price growth (+0.1% vs. +0.4%). Investors will now shift their focus to tomorrows U.K. budget.

Note: The U.K's House of Lords holds its final debate and vote on Article 50 Bill.

Elsewhere, data from the Czech central bank this morning showed that it intervened on a massive scale in January, by +€14.5B – far exceeding any previous amount since the central bank introduced a currency target (€27.016) four years ago.

Note: CZK central bank has signalled that it may discontinue the target around midyear is caused investors to pour into the CZK and hence the reason for intervention.

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p>5. Eurozone growth unrevised

Eurostat has left its estimate for Q4 growth unrevised at +0.4% and +1.7% on the year.

Digging deeper, the breakdown showed the regions recovery has been kept on a steady path by a rebound in investment, and pick-ups in consumer and government spending. Trade was a drag, with imports rising at a faster pace than exports despite the EUR weakening in Q4.

The ECB should be happy to see a rise in investment, but expect Draghi to focus on inflation Thursday and potentially highlight that that consumer spending could be damped by rising inflation.

USD/JPY continues to hug the 114 line this week. Currently, the pair is trading at 113.90. In economic news, Japanese BoJ Core CPI edged up to 0.2%. The markets are keeping a close eye on Japanese Final GDP for the fourth quarter, with an estimate of 0.4%. Preliminary GDP came in at 0.2%. If GDP is revised upwards, the yen could gain ground. In the US, today's highlight is Trade Balance, with an expected deficit of 47.0 billion. On Wednesday, the US releases ADP Nonfarm Employment Change, ahead of the official Nonfarm Payrolls report on Friday.

Donald Trump continues to create controversy on an almost basis, much to the consternation of the markets. Still, the dollar remains strong, buoyed by a strong economy and the increasing likelihood of a rate hike at the upcoming Fed policy meeting on March 15. The likelihood of a March hike as jumped to 84%, according to the CME group, compared to 33% just a week ago. Why the huge jump in odds? One reason is that Fed policymakers have sent out strong hints that the Fed is leaning towards raising rates next week. Earlier in the year, the Fed sent out signals Fed sent out signals that it would stay on the sidelines until it had a clearer picture of Trump's economic agenda, such as an outline of tax reform or fiscal spending plans. That has changed, as the Fed appears poised to move ahead despite the lack of any details about the administration's economic policy. This week's job numbers will be critically important, as strong numbers will likely boost the odds of a March move as well as push the greenback to higher levels.

The DAX Index continues to have an uneventful week. The index is up slightly in the Tuesday session, trading at 11,968.50. On the release front, German Factory Orders declined 7.4%, well below the estimate of a 2.5% decline. Eurozone Revised GDP remained unchanged at 0.4%, matching the forecast. On Wednesday, Germany releases Industrial Production.

German numbers were generally solid last week, but it's been a different tune early this week. The markets were braced for a downturn from Factory Orders in February, but the decline of 7.4% was much sharper than expected. On Monday, retail sales, the primary gauge of consumer spending, declined 0.8%, compared to an estimate of 0.2%. This marked a fifth decline of six releases, as the German consumer continues to hold tight to her purse strings. The euro has held steady despite these weak readings, but if the negative trend continues from the Eurozone's largest economy, investors could get edgy and drag the DAX to lower levels.

Germany's Deutsche Bank was in the spotlight on Monday. The bank decided on a major reorganization on Sunday, which includes raising EUR 8 billion by issuing 687.5 million shares on March 21. Deutsche Bank has hit rough waters, and it seemed only a matter of time before it was forced took some drastic measures to right the boat. In December, the bank reached a $7.2 billion settlement with the U.S. Department of Justice for selling toxic mortgage-backed securities. Deutsche had a dismal 2016, with losses of EUR 1.4 billion. This capital hike is the fourth since 2010, and it remains to be seen if this move will attract investors and help set the bank in the right direction. Deutsche Bank shares have lost ground this week, weighing on the DAX.

Donald Trump continues to create controversy on an almost basis, much to the consternation of the markets. Still, the dollar remains strong, buoyed by a strong economy and the increasing likelihood of a rate hike at the upcoming Fed policy meeting on March 15. The likelihood of a March hike as jumped to 84%, according to the CME group, compared to 33% just a week ago. Why the huge jump in odds? One reason is that Fed policymakers have sent out strong hints that the Fed is leaning towards raising rates next week. Earlier in the year, the Fed sent out signals Fed sent out signals that it would stay on the sidelines until it had a clearer picture of Trump's economic agenda, such as an outline of tax reform or fiscal spending plans. That has changed, as the Fed appears poised to move ahead despite the lack of any details about the administration's economic policy. This week's job numbers will be critically important, as strong numbers will likely boost the odds of a March move as well as push the greenback to higher levels.