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Investors turn their attention to the Retail Sales to better assess the progress made in the US economy, Dollar hangs in the balance
MORNING BRIEF
Mixed trading conditions were noticed yesterday in the currency markets. Investors were still affected by the recent NFP report on Friday and thus significant repositioning took place. The Dollar was little changed against the Euro but gained versus the British Pound that fell below 1.6400. Major stock indices fell also with the Dow Jones registering its biggest drop for months and although the momentum drove the FTSE 100 lower from its recent highs it seems that is wasn’t enough to drive it outside the sideways move its holds for quite some time. Investors’ attention now turns to today’s important news releases that could make for some major swings in the currencies involved. The UK CPI figures are scheduled for release early today and the Pound is at risk while at the same time the most important event for the day ahead is the US Retail Sales. Expectations make word for a possible decline on the Retail Sales figures and this poses a threat for the recently weakened Dollar. If the consumer data show that buying in the US slowed down in December then this will be yet another headache for the Fed. Indicative of the climate within the central bank will be the comments expected from two US policymakers, Fisher and Plosser, delivering speeches later today. The week seems empty of any extremely important events apart from some CPI reports and this means that the markets will probably continue to dance on the post-NFP rhythm while trying to assess how much an impact the disappointing jobs’ data will have on Fed’s tapering agenda.
British CPI and US Retail Sales figures are the main focus for today
The Economic Calendar holds a few important events for the day ahead and the British and US domestic economies are in the spotlight. Early in the morning the British Consumer Price Index is scheduled to be released and any deviations from the projected 2.1% figure will definitely be reflected on the Pound. However, the most important event for today is undoubtedly the US Retail Sales. The US economy has been on a string of better than expected results for the past months but the recent NFP miss has led investors to doubt whether the progress made is actually as big as they’d thought. The Retail Sales are expected to print lower than the previous month and any surprises here could spur significant reaction flows. Finally, towards the end of the day two US policymakers, Fed Presidents Plosser and Fisher will be delivering speeches and their comments could potentially shed some light on what’s going on inside the FOMC members’ minds.
Economic Calendar
|
Time |
Currency |
Event |
Importance |
Forecast |
Previous |
|
9.30 |
GBP |
Consumer Price Index |
High |
2.1% |
2.1% |
|
13.30 |
USD |
Advance Retail Sales |
High |
0.1% |
0.7% |
|
17.45 |
USD |
Fed’s Plosser speaks in Philadelphia |
Low |
||
|
18.20 |
USD |
Fed’s Fisher speaks in Dallas |
Low |
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TECHNICAL ANALYSIS & LEVELS
EUR/USD
The Euro remained pretty much unchanged yesterday against the Dollar hovering around the 1.3660 level. The exit above or below of this tight range will show us what’s next for the currency pair and the US Retail Sales could be the catalyst behind any major moves. As such we’d like to offer our scenarios: we’d like to enter long at 1.3690, target the 1.3715 and 1.3765 marks and place a stop at the 1.3630 area. However, if the Dollar picks up pace against the Euro and the 1.3635 support gets broken we’d like to enter short at the 1.3630 mark, target the 1.3610 and 1.3575 marks and place a stop at the 1.3685 level. A dual opportunity for the Euro that could see some volatility today.
GBP/USD
The Pound declined heavily against the Dollar yesterday and the reason for that decline is at this point still unknown. No results or developments were at play yesterday for the UK economy however the British coin almost 150 pips. Today might be yet another hard day for the Pound as the CPI figures are expected early in the morning. Any surprises here should be reflected on the currency’s price and we’d like to offer a suggestion in case the numbers miss and the Pound falls below the recent 1.6350 low. We’d like to enter short at 1.6340, target the 1.6315 and 1.6265 marks and place a stop at the 1.6405 level. We’d like to remind you here that our position management tactics call for a 50% liquidation of the trade upon reaching target #1 and setting our stops for the rest of the position at the opening price in order to avoid losses in case of a pullback. After setting stops at the breakeven price, we leave the trade alone to either move further towards our target #2 or pull back and close us out without any losses.
FTSE 100
The FTSE 100 retested its recent highs yesterday and then retreated lower always within this range it holds for some time now. We remain committed in our short trade, our stops have been placed at the 6,780 points level and we’re waiting for the UK index to break out of this sideways pattern. Our targets stand at the 6,655 and6,585 points levels.
Gold
Gold initially pulled back yesterday against the Dollar but afterwards it went ahead to retest its recent high at the $1,255 area. Now we think that Gold might still have some gas in the tank and we’d like to enter long if it prints a new high and target the $1,260 and $1,270 levels. As such, we’d like to enter long at the $1,255 mark, target the $1,260 and $1,270 levels and place a stop at the $1,242 level.
The above charts have been created using FXCM’s Trading Station platform.
STOCK MARKET FOCUS
[Restricted Content] PLC.
The Alpesh Patel Momentum/Value filter has indicated [Restricted Content] PLC. as our stock of the day.
Company Information: [Restricted Content]
Created using Sharescope Pro
[Restricted Content] PLC. has been rated an 8 out 10 in our Value/Growth rating and gets an A Grade rating on our Bullish Momentum meter. The P/E ratio is low suggesting that the stock might be underpriced, the ratio of the price earnings growth is medium but Turnover is down year on year challenging the growth potential. From a technical standpoint, the MACD indicator is pointing upwards in the weekly chart above suggesting further incline. We suggest that you confirm that the stock’s price has broken above recent highs prior to acquiring it. The suggested holding period for a stock of this type is 2-3 months.
Important Information
The filters and settings in the Special Edition of the Sharescope software use Alpesh Patel’s proprietary criteria to generate suggestions of securities worthy of further investigation. They DO NOT CONSTITUTE INVESTMENT ADVICE.
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