GROWTHACES.COM Forex Trading Strategies

Taken Positions

USD/JPY: long at 123.70, target 125.80, stop-loss 122.90, risk factor *

AUD/USD: short at 0.7340, target 0.7205, stop-loss 0.7390, risk factor *

Pending Orders

EUR/USD: sell at 1.1060, target 1.0810, stop-loss 1.1130, risk factor *

USD/CHF: buy at 0.9610, target 0.9810, stop-loss 0.9550, risk factor *

USD/CAD: buy at 1.3040, target 1.3260, stop-loss 1.2940, risk factor *

NZD/USD: sell at 0.6660, target 0.6405, stop-loss 0.6740, risk factor *

EUR/GBP: sell at 0.7070, target 0.6905, stop-loss 0.7120, risk factor *

EUR/CHF: buy at 1.0540, target 1.0795, stop-loss 1.0470, risk factor *

GBP/JPY: buy at 192.90 , target 196.40, stop-loss 191.80, risk factor **

AUD/NZD: buy at 1.0990, target 1.1300, stop-loss 1.0890, risk factor **

EUR/USD: US ISM Could Be A Market Mover Today

(sell at 1.1060)

• Eurozone manufacturing PMI amounted to 52.4 in July, above the earlier flash estimate of 52.2 and close to June’s 14-month high of 52.5. The Eurozone manufacturing economy showed encouraging resilience in the face of the Greek debt crisis in July. The Greek PMI reading of 30.2 was substantially worse than its previous record low (37.7 in February 2012).
• PMI showed that employment rose for the eleventh straight month, reflecting the continued expansion of output in the sector and a slight accumulation of backlogs of work. Cost pressures remained on the upside in July. Input prices rose for the fifth month running, albeit to the weakest extent since  April. A number of manufacturers reported that the weakened euro was pushing associated costs higher. Meanwhile, selling price inflation remained muted, with only a slight increase in charges reported.
• The US Employment Cost Index, the broadest measure of labor costs, edged up 0.2% qoq in the second quarter. That was the smallest gain since the series started in the second quarter of 1982 and followed an unrevised 0.7% increase in the first quarter. The market expected a rise by 0.6% qoq. The Employment Cost Index is widely viewed by policymakers and economists as one of the better measures of labor market slack. It is also considered a better predictor of core inflation.
• St. Louis Federal Reserve President James Bullard, a hawkish Fed official who has long called for an earlier tightening,  said the latest US economic growth data boosts the case for the central bank to raise interest rates in September. He shrugged off data on Friday showing surprisingly little growth in employer costs.
• The EUR/USD jumped on Friday after weaker-than-expected employment cost index release, but in our opinion the reaction was exaggerated. The USD recovered soon after Bullard’s comments. Technical analysis suggests that the long upper shadow on Friday’s candlestick line highlights the rejection of the upside. We are looking to get short again at 1.1060. The overall bias is bearish this week and we expect the EUR/USD to fall to 1.0810 if our sell orders is filled.
• The USD will probably draw strength from US economic indicators this week, especially non-farm payrolls on Friday. Today investors will be watching ISM manufacturing data (14:00 GMT). Our forecast is in line with market expectations. However, the data may be a market mover today.

Significant technical analysis’ levels:

Resistance: 1.1012 (hourly high Jul 31), 1.044 (hourly high 31), 1.1052 (hourly high 31)

Support: 1.0921 (low Jul 31), 1.0894 (low Jul 30), 1.0869 (low Jul 22)

GBP/USD: Strong GBP Weighs On British Export Performance

(stay sideways)

• British PMI index rose in July to 51.9, more than forecast of 51.6. That was up from 51.4 in June – its lowest level in over two years.
• The expansion of production remained highly dependent on the strong performance of the consumer goods sector, which offset lacklustre growth at intermediate goods producers and a contraction in the investment goods sector. New export orders declined for the fourth straight month in July , mainly as a result of the EUR/GBP exchange rate hitting competitiveness in Eurozone markets. The struggling manufacturing sector, and the impact of the strong GBP on export performance, will be a worry for the Bank of England. However, with the goods-producing sector accounting for only one-tenth of the economy, these woes may take second place to the health of the far larger services sector in determining the timing of the first interest rate hike.
• GBP investors are waiting for Super Thursday this week. On Thursday, 6 August, the BoE will for the first time simultaneously publish its policy decision, the minutes of its meeting, including the votes, and the Inflation Report (11:00 GMT), which will be followed by the Inflation Report conference. Investors will focus mainly on  the votes at August meeting , that is, whether there is dissent and, if so, to what degree. We expect at least two dissenters and probably three, but even four votes for a 25 bp hike cannot be excluded. If there are three or more dissenters, then our view is that it will be taken as a “hawkish” signal by the markets.
• In our opinion the outlook on the GBP/USD is unclear, but we are looking to get short on the EUR/GBP at 0.7070. The re-pricing of market expectations for a rate hike should support the GBP in the coming weeks. Technical situation on the EUR/GBP also suggests falls in the exchange rate, as the 10 and 30-day moving averages are negatively aligned.

Significant technical analysis’ levels:

Resistance: 1.5645 (session high Aug 3), 1.5679 (high Jul 31), 1.5691 (high Jul 29)

Support: 1.5550 (low Jul 31), 1.5528 (low Jul 28), 1.5490 (low Jul 27)