MORNING SLICES
Fundys – A quiet overnight session of trade on the data front, with the only key release coming from the Eurozone in the form of the trade deficit, which managed to come in better than expected. However the data was somewhat misleading with exports still showing a significant deterioration. This helped to weighed on the Euro, while traders were still focused on the previous week’s unimpressive GDP results and more downbeat comments from officials in the region. ECB Tumpel-Gurgell said that the central bank needed to do everything it could to restore power, while ECB Weber noted that monetary policy was becoming increasingly ineffective. ECB Nowotny was also in the news saying that he expected the ECB to revise down its forecasts for June. Elsewhere, Japanese Finance Minister Sugimoto warned that the MOF was watching FX closely and did not want to have currency appreciation to have a negative impact on the economy. A Bloomberg article entitled “Pound a Screaming Buy as UK Attracts Investment” helped to bolster Cable, with the UK currency also benefiting greatly on the Eur/Gbp cross. Oman, one of the Gulf countries was in the news after announcing that it planned to diversify its currency holdings through the GBP and Sterling, despite a preference for the USD. Looking ahead, Monday’s North American calendar is light with NAHB housing data (16 expected) due at 17:00GMT. Treasury Secretary Geithner is slated 15:30 GMT in a Newsweek Magazine event.
Techs - EUR/USD extending declines into the early week with the market falling just shy of the 200-Day thus far. The trigger of a major hourly head & shoulders top on Friday has opened the latest pullback with a measured move objected now exposing the lower 1.3300’s. Key levels to watch over the coming session come in by 1.3525 and 1.3415. USD/JPY has been flirting with the 100-Day SMA for the past several days but has been unable to close below the longer-term moving. The bottom of the daily Ichimoku cloud has also been supporting dips at current levels and we would not ruled out the potential for an upside break over the coming sessions. A push above 96.20 will be required to confirm short-term basing prospects. GBP/USD continues with the remarkable up-down pattern since 2 Wednesdays ago, with the pair tracking higher on the day thus far. Key levels to watch over the coming session come in by 1.5290 and 1.5115. USD/CHF is looking like it wants to establish an interim base by 1.0975, with the pair breaking back above 1.1120 on Friday. Key levels to watch over the coming session come in by 1.1340 and 1.1125.
Flows – US investment house selling Usd/Jpy; Asian central bank on the bid. Real money buyers of Aussie; model funds selling.
Trade of the Day – Aud/Jpy: Price action on Friday helped to confirm the formation of a bearish outside week and suggest the cross could be setting up for a resumption of the broader downtrend. As such, we look for opportunities to sell into rallies on Monday with any upside viewed as corrective in nature. Ideally, Thursday and Friday’s highs just over 73.00 should represent a lower top ahead of the next drop back below 70.50. Both the 50-Day and 200-Day SMAs come in by 70.00 and we expect this psychological level to be tested at a minimum, with a break to expose deeper setbacks to 66.85. Strategy: Sell @72.50 FOR A 69.00 OBJECTIVE, STOP @74.50. Stops to be trailed to cost on a break back below 72.00. If trade triggers and 72.00 not broken, position to be closed out at NY close (5pm NY time) on Monday. Recommendation to be removed if not triggered by NY close on Monday.
Written by Joel Kruger, Technical Currency Strategist for DailyFX.com
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Joel Kruger publishes 6 daily pieces:
“Tech Talk” – A Daily Video Highlighting Technical Developments in the Overnight Session of Trade.
Monday-Friday (between 5:30am-6:30am EST)
“Morning Slices” – Morning Overview using Fundamental, Technical, Flow, and Quantitative Analysis (Includes “Trade of the Day”).
Monday-Friday (between 6:30am-7:30am EST)
“Indicator of the Day” – A Feature Report that Highlights our Most Significant Technical Indicator of the Day.
Monday-Friday (between 8:00am-9:00am EST)
“Cross Country” – A Midday Fundamental Update, along with Technical Analysis of Selected Cross Rates.
Monday-Friday (between 10:30am-11:30am EST)
“Scandi Daily” – A Specialized Daily Fundamental and Technical Overview of the Nordic Currencies. (This report is only distributed through email. Please contact Nordic@fxcm.com if you would like to be added to distribution.)
Monday-Friday (between 11:30am-12:30pm EST)
“Daily Classical” – A Daily Technical Overview of the Major Currencies.
Monday-Friday (published between 2:00pm-3:00pm EST)
