Submitted by: Growth Aces
GROWTHACES.COM Trading Positions
EUR/USD: short at 1.2605, target 1.2465, stop-loss 1.2700
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
AUD/USD: short at 0.8800, target 0.8610, stop-loss 0.8915
EUR/CHF: long at 1.2085, target 1.2160, stop-loss 1.2045
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EUR/USD recovered stronger than expected
(our short position is endangered, outlook still bearish)
William Dudley, president of the New York Fed, who has a permanent vote on monetary policy and stands among the core of the Fed’s dovish decision-makers, predicts about 3% growth in both the second half of this year and in 2015, and a slow rise in inflation to about 1.9% by the end of next year. In his opinion the Federal Reserve could reasonably be expected to raise U.S. interest rates in mid-2015.
Minneapolis Federal Reserve Bank President Narayana Kocherlakota, who has a vote on the central bank’s policy-setting Federal Open Market Committee through the end of this year, said he doesn’t see inflation rising back to the Fed’s 2% goal until 2018. In his opinion the Federal Reserve should keep interest rates near zero through at least the end of next year. Most of his colleagues disagree, with all but three indicating at the Fed’s most recent meeting that they view a 2015 rate increase as appropriate.
U.S. Department of Labor said that job openings rose to their highest level in more than 13 years in August. Job openings were at a seasonally adjusted 4.835 million compared with a downwardly revised 4.605 million in July. Fed policymakers are monitoring the JOLTS report as they consider their next step on monetary policy.
ECB Vice President Vitor Constancio said that the measures decided in the past few months mark a new phase in the ECB’s approach. He added: “With these new measures, the Governing Council demonstrates that we are ready to actively steer the size of our balance sheet towards significantly larger levels, so as to further ease the stance of monetary policy.”
Investors are waiting for the speech of the ECB President Draghi scheduled for Thursday 15:00 GMT. In our opinion any new revelations on monetary policy are unlikely. However, Draghi can suggest a willingness to take additional measures if existing easing proves ineffective.
The EUR/USD has been volatile over the past few trading days. After taking profit at 1.2510 on our short position we went short again at 1.2605. The EUR/USD recovery was stronger than we expected and our position is endangered. The rate broke above the resistance at 10-dma and the nearest resistance level is 1.2683. In the opinion of Growth Aces the contrast between the US and Euro zone macroeconomic data along with divergent central bank expectations should limit the EUR/USD recovery and bearish rally remains the preferred strategy.
Significant technical analysis’ levels:
Resistance: 1.2683 (hourly high Oct 8), 1.2699 (high Oct 2), 1.2715 (high Sep 29)
Support: 1.2583 (low Oct 7), 1.2504 (low Oct 6), 1.2501 (low Oct 3)
AUD/USD: A lot of fuss about employment data
(we are short at 0.8800, the target is 0.8610)
The Australian Bureau of Statistics said it would restate employment figures to account for an absence of seasonal patterns usually seen in July, August and September. The September jobs figures are due at 0030 GMT on Thursday.
The ABS said that while compiling the September data it found that the normal seasonal pattern evident from July to September was not apparent, so it had decided to report the raw numbers instead. The ABS said: “This means the seasonally adjusted estimates (other than for the aggregate monthly hours worked series) for these months will be the same as the original series and this will result in revisions to the previously published July and August seasonally adjusted estimates.”
The August figure showed an incredible 121k increase. The original series showed employment rose by 32.1k in August, rather than by 121k. For July, original employment fell by 11.9k while the adjusted number dipped 4.1k. The changes should also see major revisions to the unemployment rate. The seasonally adjusted series showed the jobless rate spiked to 6.4% in July, from 6.1% in June, only to drop back to 6.1% in August. Yet the original numbers put the jobless rate at 6.0% for both July and August.
It is hard to release a reliable forecast for employment data this month. The AUD/USD did not react significantly to the negative revisions of employment data from the previous month. Due to the fuss about the data and tarnished reputation of the Australian Bureau of Statistics, Thursday’s jobs number probably will not be so closely tracked in financial markets. However, weak revisions can weigh on the AUD. We remain short at 0.8800 with the target of 0.8610.
Significant technical analysis’ levels:
Resistance: 0.8817 (session high Oct 8), 0.8885 (high Sep 25), 0.8897 (Sep 24)
Support: 0.8649 (low Oct 6), 0.8641 (low Oct 3), 0.8623 (low Jul 8, 2010)
GrowthAces.com is an independent macroeconomic research consultancy for traders. We offer you daily forex analysis with forex trading signals. The service covers forex forecasts and signals for following currencies: EUR, USD, GBP, JPY, CAD, CHF, AUD, NZD as well as emerging markets. Our subscribers should expect to receive: forex trading strategies, latest price changes, support and resistance levels, buy and sell forex signals and early heads-up about the potential fx trading opportunities. GrowthAces.com offers also daily macroeconomic fundamental analysis that enables you to see fundamental changes on forex market. We provide in-depth analysis of economic indicators resulting from knowledge, experience, advanced statistics and cutting-edge quantitative tools.
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