How To Trade Ahead Of FOMC Meeting?

Article by http://growthaces.com

GROWTHACES.COM Trading Positions

EUR/USD: long at 1.2450, target 1.2250, stop-loss 1.2530

USD/JPY: long at 118.60, target 121.50, stop-loss 117.80

USD/CHF: long at 0.9650, target 0.9800, stop-loss 0.9590

USD/CAD:long at 1.1420, target 1.1640, stop-loss 1.1540

EUR/GBP: short at 0.7930, target 0.7800, stop-loss 0.7990

EUR/CHF: long at 1.2025, target 1.2040, stop-loss 1.1995

GBP/JPY: long at 186.10, target 190.40, stop-loss 184.70

GROWTHACES.COM Pending Orders

NZD/USD: sell at 0.7900, if filled target 0.7740, stop-loss 0.7960

AUD/USD: sell at 0.8330, if filled target 0.8180, stop-loss 0.8400

EUR/USD: How To Trade Ahead Of FOMC Meeting?

(get short ahead of FOMC meeting next week)

• Yesterday’s data showed U.S. retail sales beat expectations on all fronts in November. The headline figure was up 0.7% mom and 4.8% yoy (vs. median forecast of 0.4% mom), ex-autos sales was up 0.5% mom (forecast of 0.1% mom), and the core (excluding autos, gas, building materials and food services) up 0.6% (forecast of 0.4% mom). The yoy growth was the highest since February 2012.
• The sales figures indicate that consumers have pumped up their holiday shopping, despite initial signs within the retail industry that Black Friday shopping plunged compared to the previous year. Important figures will be released today. Investors are waiting for University of Michigan consumer confidence index (14:55 GMT). The median forecast is at the level 89.5, but in our opinion a slightly higher reading is possible (90.0).
• Euro zone industrial production rose only 0.1% mom (below expectations of 0.2% mom) and 0.7% yoy in October. Energy output fell 1.9% mom and 2.5% yoy. This offset much of the 1.8% mom rise in non-durable consumer goods and the 0.9% mom increase in the output of durable consumer goods.
• What should we focus on next week? Next Wednesday, the Federal Reserve will end its final FOMC meeting of the year. In the opinion of GrowthAces.com there is high likelihood that the Fed will eliminate the “considerable time” from its statement. Forex traders will certainly focus on this potential change in the wording.
• Vice Chair Stan Fischer said this month: “It is clearer that we are closer to getting rid of that than we were a few months ago.” And he added: “It would not be appropriate for me to give you a guess as to what will happen at the next meeting”. In our opinion that was a heavy hint that a change in statement should be expected.
• More hawkish rhetoric of the Fed is likely to boost the USD next week. Moreover, the Fed will update its medium-term economic and interest rate projections. In the opinion of GrowthAces.com the outlook for economic growth will be upgraded and for inflation will be downgraded.
• Another important figures next week are preliminary Euro zone PMIs readings (scheduled for Tuesday, 9:00 GMT) and German Ifo Index (scheduled for Thursday, 9:00 GMT). The releases are likely to show signs of recovery in the Euro zone’s economy.
• We have got short on the EUR/USD at 1.2450 and set the target at 1.2250, which in our opinion is achievable after the Fed’s statement on Wednesday.

Significant technical analysis’ levels:

Resistance: 1.2433 (21-dma), 1.2496 (high Dec 11), 1.2507 (high Dec 1)

Support: 1.2376 (10-dma), 1.2362 (low Dec 10), 1.2342 (61.8% of 1.2247-1.2496)

GBP/USD: Focus On CPI Reading Next Week

(we stay sideways)

• Construction output fell 2.2% mom in October after rising by the same amount in September.
• The Royal Institute of Chartered Surveyors said its monthly house price index sank to 13 in November, down from 20 in October and its lowest level since May 2013. Britain’s housing market has been slowing since the middle of this year. The Institute saw the potential for a boost from tax changes announced last week by finance minister George Osborne which, he said, will result in lower payments of the stamp duty tax for more than 90% of home buyers.
• The Bank of England said it would publish minutes of its debates alongside its decisions, rather than wait nearly two weeks as it does now. The change would come into effect in August 2015. The Bank also said on Thursday it wanted to hold only eight monetary policy meetings a year starting in 2016, down from 12 now. The Finance Minister welcomed the reforms and said he would seek to pass legislation needed to change the BoE’s meetings schedule after May’s election.
• GBP traders are now waiting for consumer price inflation data due next Tuesday. Inflation is expected to fall to 1.2% from 1.3% a month earlier. Earlier this week BoE governor Mark Carney said that UK CPI would probably fall below 1% in the coming months. The BOE’s inflation target is 2.0%.

Significant technical analysis’ levels:

Resistance: 1.5737 (hourly high Dec 11), 1.5757 (high Dec 11), 1.5826 (high Nov 27)

Support: 1.5684 (21-dma), 1.5648 (low Dec 10), 1.5626 (low Dec 9)

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