Daily Alert: For Wednesday 9th December 2015

Mark Nugent2015 H2, Daily Alert

Today’s slides are HERE.

Today’s Economic News

Earlier today Japanese GDP (Tier II announcement) was revised upwards (and, importantly, above zero), meaning Japan is now NOT technically in recession. Iron ore, copper and oil all down across the board. Chinese trade balance misses target by > 10%. Asian stock markets down. This takes us a bit closer to risk off. Manufacturing production in the UK came in at -0.4% vs expectation of -0.1%. GBP drops.

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Current Trades

My GBPNZD trade drops to around 180 pips below entry. I’m feeling glad about that 1000 pip stop I have. The RBNZ rate announcement is tomorrow evening so I will discuss it in tomorrow’s Daily Alert.

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Euro sentiment

The Euro index is up again, showing there is still some bullish sentiment around. This currency requires more watching.

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NZ Rate Decision (sell NZD)

GBPNZD still looks like a good long setup (as it is below my long entry point).

Swiss Rate Decision (sell CHF)

Reflecting on past interventions by the Swiss central bank, and their complete lack of forward guidance, I think being in the USDCHF prior to the rate announcement on Thursday is too risky. It is not inconceivable that they may re-introduce a new currency peg with the Euro at which point things would go crazy. I will look to trade if there is a rate reduction on pullbacks AFTER the event. I will discuss this more on Wednesday night.

GBPCAD (as per Weekly Outlook; CAD weakness due to oil price)

We’ve seen a decent two day rise driven by poor oil prices. This move may be over, as Monday saw much more movement than today.

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Major Issues for tomorrow

The NZ cash rate announcement – see tomorrow’s Daily Alert. Chinese CPI will be interesting.