The ShadowTraderPro FX Trader is your daily companion to the foreign exchange markets. Each issue contains a look at an emerging currency trade setup from a technical perspective, along with selected news on the four major pairs and a full economic calendar specifically tailored to the Forex trader. The report also contains potential FX trade setups which are listed with defined entry, defined target and defined stop. Subscribers receive email confirmations and updates on these trades so that they can follow along.
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Dollars & Sense
Good evening, Forex Traders. The equity markets have dropped about 1% across the board from Friday’s highs. Volatility (VIX) rose nearly 6% during the day on Monday. Both of these moves have caused the pressure to buy both yen and U.S. dollars, driving price down on the pairs we have been watching. The further pullback is not disliked, it is welcomed. Whenever there is a run that is hard to catch, the pull back is often sizable and then a more tradable trend emerges. We are watching for that tradable trend to emerge now.
The EUR/USD has broken through support near 1.42 and has continued to move down. We will watch for a move to 1.4175 to confirm the end of our downtrend and enter into this trade long. The stop loss on this trade will be 1.3970. We will take a second entry on this trade long with a break above 1.4225. Target on this trade will 1.4400 initially and we will widen out the target as appropriate.(see EUR/USD below)
The GBP/USD has set up similarly. We are looking for an end of this pull back, preferably a break above 1.6545. This will be a buy stop at 1.6545 with a stop loss of 1.6460 and a target of 1.6970. This trade set up will have a second buy as a buy stop at 1.6670 at which point both stop losses will be tightened to 1.6530. We will watch for other opportunities to tighten the stops after the second entry point.(below).
The AUD/JPY has pulled back similar to the dollar pairs but not as aggressively. We believe it will slow down when it hits a 50% retracement. This could be a good entry but we will watch for the bounce near 80.67 before trading the next long position. (see below).
Major Pair Scoop
(Reuters) - The U.S. dollar rose against the euro on Monday with sentiment still supported by stronger-than-expected U.S. jobs data that bolstered world markets on Friday, but stocks fell as investors sold some shares to pocket part of the recent gains.
With no major U.S. economic data on tap, investors traded cautiously before a two-day meeting by the U.S. Federal Reserve on Tuesday and Wednesday.
Oil futures prices edged lower, but U.S. Treasury debt prices shot higher as the stock market's modest sell-off shifted some money into bonds.
Investors do not expect the Fed to increase interest rates at this week's meeting, but they are particularly monitoring the likelihood of a rate rise by the Fed early next year, after Friday's U.S. unemployment numbers gave more clarity that the economy is turning around from a deep recession.
"The tone of the market has shifted since the jobs report." said Mustafa Chowdhury, head of U.S. rates research with Deutsche Bank in New York.
The U.S. dollar gained 0.4 percent to 79.298 against a basket of major currencies, according to the U.S. Dollar Index .DXY. The euro EUR= was down more than 0.3 percent against the U.S. currency at $1.4121.
It was the dollar's third consecutive winning session and the possible break of a recent trading pattern that consisted in the greenback weakening whenever positive economic data encouraged investors to increase holdings of higher-yielding assets abroad.
For stock markets, however, the week started with a "mild profit-taking day after a very good two months," said Chad Morganlander, portfolio manager at Stifel, Nicolaus & Co in Florham Park, New Jersey.
The benchmark MSCI world equity index .MIWD00000PUS declined 0.53 percent, after rising 1.7 percent in the previous week and 19 percent since the start of the year.
The Dow Jones industrial average .DJI fell 51.39 points, or 0.55 percent, to 9,318.68, while the Standard & Poor's 500 Index .SPX lost 6.61 points, or 0.65 percent, to 1,003.87. The Nasdaq Composite Index .IXIC dropped 14.54 points, or 0.73 percent, at 1,985.71.
On Friday, the major U.S. stock indexes closed at their highest levels in nine to 10 months.
The FTSEurofirst 300 index .FTEU3 fell 0.6 percent to close at 944.64 points, dragged lower by shares of automakers and miners.
Emerging market stocks dipped 0.1 percent, according to a MSCI benchmark index .MSCIEF.
In contrast, U.S. Treasuries rose as the retreat in stock markets gave investors an opportunity to go bargain hunting for bonds
The benchmark 10-year U.S. Treasury note US10YT=RR was up 21/32 in price, with the yield at 3.776 percent, down from 3.86 percent late on Friday. The 30-year U.S. Treasury bond US30YT=RR gained more than a full point, up 1-4/32 in price, with the yield at 4.535 percent, down from 4.612 percent at Friday's close.
Even though the U.S. Treasury is selling $75 billion in three-, 10- and 30-year securities this week, other issues that are maturing, as well as coupon payments, will free up billions of dollars in cash that could find their way back into the Treasury market.
Meanwhile, oil prices seesawed between negative and positive territories, supported by rising heating oil futures. But some investors are concerned the recent rally might have been excessive.
In early afternoon trading, U.S. light sweet crude oil CLc1 was down 31 cents, or 0.4 percent, at $70.62 per barrel, after rising as much as $71.57 per barrel earlier
FX Economic Calendar
Up and coming economic data relative to FX markets that may move markets this week.
| Date | Time (GMT) | Currency | Description | Importance | Forecast | Previous |
|
8/11/2009 |
1:30 AM |
AUD |
NAB Business Confidence (JUL) |
Medium |
|
4 |
|
8/11/2009 |
|
GBP |
DCLG |
Medium |
|
-12.50% |
|
8/11/2009 |
5:00 AM |
JPY |
Consumer Confidence (JUL) |
Medium |
|
38.1 |
|
8/11/2009 |
5:45 AM |
CHF |
SECO Consumer Climate (JUL) |
Medium |
|
-38 |
|
8/11/2009 |
8:30 AM |
GBP |
Visible Trade Balance (Pounds)
(JUN) |
Medium |
-6200 |
-6263 |
|
8/11/2009 |
12:15 PM |
CAD |
Housing Starts (JUL) |
Medium |
141.4K |
140.7K |
|
8/12/2009 |
1:00 AM |
AUD |
Westpac Consumer Confidence (AUG) |
Medium |
|
9.30% |
|
8/12/2009 |
1:30 AM |
AUD |
Wage Cost Index (QoQ) (2Q) |
Medium |
0.80% |
0.80% |
|
8/12/2009 |
1:30 AM |
AUD |
Wage Cost Index (YoY) (2Q) |
Medium |
3.80% |
4.20% |
|
8/12/2009 |
5:00 AM |
JPY |
Bank of |
Medium |
|
|
|
8/12/2009 |
8:30 AM |
GBP |
Jobless Claims Change (JUL) |
High |
28.0K |
23.8K |
|
8/12/2009 |
8:30 AM |
GBP |
Claimant Count Rate (JUL) |
Medium |
4.90% |
4.80% |
|
8/12/2009 |
8:30 AM |
GBP |
ILO Unemployment Rate (3M) (JUN) |
Medium |
7.70% |
7.60% |
|
8/12/2009 |
8:30 AM |
GBP |
Average Earnings inc bonus (3MoY)
(JUN) |
Medium |
2.40% |
2.30% |
|
8/12/2009 |
9:00 AM |
EUR |
Euro-Zone Industrial Production s.a. (MoM) (JUN) |
Medium |
0.20% |
0.50% |
|
8/12/2009 |
9:30 AM |
GBP |
Bank of |
High |
|
|
|
8/12/2009 |
12:30 PM |
CAD |
International Merchandise Trade
(Canadian dollar) (JUN) |
Medium |
-0.5B |
-1.4B |
|
8/12/2009 |
12:30 PM |
CAD |
New Housing Price Index (MoM) (JUN) |
Medium |
|
-0.10% |
|
8/12/2009 |
12:30 PM |
USD |
Trade Balance (JUN) |
Medium |
|
-$26.0B |
|
8/12/2009 |
6:00 PM |
USD |
Monthly Budget Statement (JUL) |
Medium |
|
|
|
8/12/2009 |
6:15 PM |
USD |
Federal Open Market Committee
Interest Rate Decision |
High |
0.25% |
0.25% |
|
8/13/2009 |
12:30 AM |
AUD |
CBAHIA House Affordability (2Q) |
Medium |
|
|
|
8/13/2009 |
1:00 AM |
AUD |
Consumer Inflation Expectation
(AUG) |
Medium |
|
3.20% |
|
8/13/2009 |
6:00 AM |
EUR |
German Gross Domestic Product s.a. (QoQ) (2Q P) |
High |
-0.20% |
|
|
8/13/2009 |
6:00 AM |
EUR |
German Gross Domestic Product w.d.a. (YoY) (2Q P) |
High |
-6.60% |
|
|
8/13/2009 |
6:00 AM |
EUR |
German Gross Domestic Product n.s.a. (YoY) (2Q P) |
High |
-7.60% |
-6.70% |
|
8/13/2009 |
6:45 AM |
EUR |
French Gross Domestic Product (QoQ) (2Q P) |
Medium |
|
-1.20% |
|
8/13/2009 |
6:45 AM |
EUR |
French Gross Domestic Product (YoY) (2Q P) |
Medium |
|
-3.20% |
|
8/13/2009 |
7:15 AM |
CHF |
Producer & Import Prices (YoY) (JUL) |
Medium |
-5.80% |
-5.60% |
|
8/13/2009 |
7:15 AM |
CHF |
Producer & Import Prices (MoM) (JUL) |
Medium |
0.10% |
0.00% |
|
8/13/2009 |
8:00 AM |
EUR |
European Central Bank Monthly
Report (AUG) |
Medium |
|
|
|
8/13/2009 |
9:00 AM |
EUR |
Euro-Zone Gross Domestic Product s.a. (YoY) (2Q A) |
High |
-5.10% |
-4.90% |
|
8/13/2009 |
9:00 AM |
EUR |
Euro-Zone Gross Domestic Product s.a. (QoQ) (2Q A) |
High |
-0.50% |
-2.50% |
|
8/13/2009 |
12:30 PM |
USD |
Retail Sales Less Autos (JUL) |
Medium |
0.10% |
0.30% |
|
8/13/2009 |
12:30 PM |
USD |
Advance Retail Sales (JUL) |
High |
0.50% |
0.60% |
|
8/13/2009 |
10:45 PM |
NZD |
Retail Sales Ex Inflation (QoQ) (2Q) |
Medium |
0.20% |
-2.90% |
|
8/13/2009 |
10:45 PM |
NZD |
Retail Sales (MoM)
(JUN) |
Medium |
-0.30% |
0.80% |
|
8/13/2009 |
11:30 PM |
AUD |
RBA Governor's Semi-Annual
Parliament Testimony |
Medium |
|
|
|
8/13/2009 |
11:50 PM |
JPY |
Tertiary Industry Index (MoM) (JUN) |
Medium |
-0.30% |
-0.10% |
|
8/13/2009 |
11:50 PM |
JPY |
Bank of |
Medium |
|
|
FX Trader Live Calls
Note: As currency markets are open around the clock, some action in plays can and will occur outside of U.S. trading hours. Please note that emails are only sent to clients between the hours of 9:00am EST to 5:00pm EST, Monday through Friday. Any trade action happening outside of these hours will be confirmed in an email the following morning.
Long Ideas
| Symbol | Trigger Price |
Stop Price | Target Price |
Notes |
|---|---|---|---|---|
| EUR/USD | 1.4175 | 1.3970 | 1.4400 | This is a two part trade, this if the first entry. Buy stop at 1.4175 with a stop at 1.3970 and a target at 1.4400. |
| EUR/USD | 1.4220 | 1.3970 | 1.4400 | This is a two part trade, this if the second entry. Buy stop at 1.4220 with a stop at 1.3970 and a target at 1.4400. We will tighten both stops if the second is triggered. |
| GBP/USD | 1.6545 | 1.6460 | 1.6970 | This is a two part trade, this if the first entry. Buy stop at 1.6545 with a stop at 1.6460 and a target at 1.6970. |
| GBP/USD | 1.6670 | 1.6530 | 1.6970 | This is a two part trade, this if the second entry. Buy stop at 1.6670 with a stop at 1.6530 and a target at 1.6970. Both stops will be set to 1.6530 if the second trade triggers. |
| Symbol | Trigger Price |
Stop Price | Target Price |
Notes |
|---|---|---|---|---|
| none |
FX Trader Portfolio
| pair | dir | size | date entered |
entry price |
date closed |
exit price |
target | stop | status | mark to market |
p&l pips |
p&l capital |
capital commit |
OPEN POSITIONS - week of 08/10 - 08/14 |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| none | |||||||||||||
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| CLOSED POSITIONS - week of 08/10 - 08/14 | |||||||||||||
| none | |||||||||||||
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