Article by http://growthaces.com

GROWTHACES.COM Trading Positions

EUR/USD: short at 1.2480, target 1.2180, stop-loss 1.2360

USD/JPY: long at 119.90, target 121.00, stop-loss 119.50 (we got long at 119.90 today)

USD/CHF: long at 0.9600, target 0.9880, stop-loss 0.9730

EUR/CHF:long at 1.2025, target 1.2095, stop-loss 1.1995

GROWTHACES.COM Pending Orders

USD/CAD: buy at 1.1330, target 1.1460, stop-loss 1.1280

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EUR/USD: How To Trade Ahead Of The ECB?

(stay short, target lowered to 1.2180)

• The European Central Bank announces its decision at 12:45 GMT. The rates are widely expected to remain on hold. The press conference of the ECB President Mario Draghi is scheduled for 13:30 GMT. The conference is likely to be one of the most important event for traders in recent months. Mario Draghi has been preparing the market for some hints on further monetary stimulus at this meeting. It is widely expected that the ECB will cut its GDP and CPI projections. The downward adjustment to the CPI forecasts is likely to be energy-driven and results also from already low starting point.

• What is Mario Draghi likely to do today? Draghi is likely to turn the green light on for non-financial corporate bond purchases in the first quarter 2015. We may also get an easing of TLTRO terms and conditions.
• What is Mario Draghi unlikely to do today? Draghi may suggest today the readiness of the central bank to sovereign purchases (following recent rhetoric of ECB’s Constancio), however the probability that sovereign quantitative easing is announced today is very low. In our opinion the bar for full-blown quantitative easing is still higher than assessed by the market. We should know that purchases of government bonds is the ECB’s last resort. It is too early for the ECB to pull the trigger.
• How to trade ahead of the ECB? It is a difficult question. One thing is for sure, the reaction of the rate will be strong and depends on how many details on further monetary easing Mario Draghi will reveal. We should remind however that the market has already priced in “dovish” Draghi today and if he is not “dovish” enough we will see some profit taking on EUR-selling positions.
• Our trading strategy ahead of today’s ECB meeting is to stay short. We have lowered the target of our EUR/USD short to 1.2180, slightly above significant support level at 1.2167 (low Aug 3, 2012), but below another strong support at 1.2256 (low Aug 16, 2012). We have lowered our stop-loss level to 1.2360.

Significant technical analysis’ levels:

Resistance: 1.2390 (high Dec 3), 1.2419 (low Dec 1), 1.2449 (21-dma)

Support: 1.2295 (low Aug 20, 2012), 1.2288 (low Aug 17, 2012), 1.2256 (low Aug 16, 2012)

USD/CAD: Loonie Stronger On More Hawkish Central Bank

(buy at 1.1330)

• The Bank of Canada kept its main policy rate at 1.00% yesterday, as widely expected. The bank’s statement was seen as slightly more optimistic than recent communiques. In the opinion of the monetary authorities Canada’s economic recovery is broadening and stronger exports were beginning to be reflected in increased business investment and employment. The bank said lower oil prices could cut inflation more than expected.
• In our opinion the BOC statement was balanced, but seen as more hawkish by the market. Traders are looking ahead to today’s Ivey PMI reading and Friday’s jobs reports (U.S. and Canadian). Our forecast for the Canadian employment number is close to the market consensus of +5k.
• The CAD outperformed nearly all its major counterparts on Wednesday. The USD/CAD fell to 1.1341 today. Our bid is waiting at 1.1330. If filled the target is 1.1460.

Significant technical analysis’ levels:

Resistance: 1.1418 (session high Dec 3), 1.1425 (high Dec 2), 1.1459 (high Dec 1)

Support: 1.1341 (session low Dec 4), 1.1319 (low Dec 2), 1.1314 (low Dec 1)

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