Daily Alert: For Wednesday 2nd December 2015

Mark Nugent2015 H2, Daily Alert

Today’s slides are HERE.

Today’s Economic News

Monday saw positive Business Confidence numbers in NZ. The NZD rallies and continues into today. BoJ’s Kuroda spoke to business people but said nothing new.

Today saw two poor PMI prints from China, confirming what we already know – slowing growth. Australia held interest rates at 2.00% as expected and the statement re-iterates contentment with the economy. The AUD rallies. UK Bank Stress Tests reveal no real issues that are not already being addressed. UK PMI is positive at 52.7 but a shade down on expectation. (Above 50 signals a growth expectation). Global dairy in NZ shows a slight increase at 3.6%, reversing three consecutive negative numbers. US Manufacturing PMI goes negative (<50) for the first time since June 2013. This should not have an impact on the rate announcement on 16th December. It would take a decline in inflation to do that.

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Current Trades

My EURUSD trade stutters before this week’s rate (and QE) announcement in Brussels. I will move my stop to breakeven. I have drawn in the psychological levels 1.0700 and 1.0600 for reference. They do seem to halt the downward move of this pair.

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Other Opportunities

The other pair to consider for a Euro weakness trade is EURGBP. As you can see, it is struggling to get and stay below the 0.7000 level. A closure below this line would be a good entry setup if you are not in EURUSD.

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Trading NZD weakness: the NZD is seeing a bit of a rally after the good Business Confidence data. GBPNZD sits at support of 2.2540 after two days of NZD strength. I will go long via a pending buy stop at the top of today’s candle.

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The alternative trade, NZDUSD, is similar to GBPNZD (although obviously here the NZ weakness trade is a short). An entry at the bottom of today’s candle via a pending sell stop is a reasonable strategy.

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I don’t see any other set-ups at the moment. The big issue this weak is with the ECB’s rate decision and perhaps more QE. Plus, it is December and NO ONE wants to take a loss in December so things may well be quiet for the rest of this month.

M1 Trades

Nothing today. I will be looking at the Canadian rate statement tomorrow at 3pm GMT.