Today’s focus turns to AUD, NZD & GBP

The current market conditions can be best summarized by a famous Hamlet quote “something is rotten in the state of Denmark”.

We had strong US retail sales data (+0.6% v +0.4% expected) yet the USD drifted lower on the back of various geopolitical issues. That’s a sure sign that the current market trading conditions are far from normal.

Sterling continued to rally through the roof as the market expects the BOE to hike rates in May. Today traders will be hanging out for the monthly UK employment data. If it’s strong then it pretty much locks in the hike for May.

The rest of the majors are simply drifting around in loose ranges with no clear fundamentals on any of them except for Sterling. So that means direction is hard to gauge.

To make cash in these markets you’re either waiting for a clearer opportunity or focusing on the major economic data releases and looking for ‘short-term’ opportunities when momentum following the releases is clear and specific.

We have a few chances today so keep an eye on your calendar for the best ones.

Check our Next Best Trades Watchlist for full details as to which specific pairs we are focusing on.

Asian Session

With the ongoing geopolitical issues that means the JPY safe-haven trade is still a possibility despite it losing traction the past week. So keep an eye on USDJPY & the JPY crosses. They are slowly breaking down but it doesn’t look like anyone wants to get run over so it’s not really moving like it should.

Also the Chinese data today will be important for the AUD & NZD for that matter. There are 4 major releases so watch and if they all line up strong or weak then we should see the antipodeans move. That’s our best chance during the Asian session to get clear momentum.

As far as technicals go the topside is the best entry level for both the Aussie and Kiwi.

European Session

Today is going to be very active for GBPUSD & GBP crosses with the high impacting UK employment data due.

Remember there are 3 major variables being releases at the same time. The claimant count and average earnings to me are the most important it will have the biggest impact.

The market has factored in a rate hike for May so if this data is strong it confirms the hike. But if the data is ‘significantly’ weak then it may put a small cloud over it and we will see a short-term down move.

The best trade is with current momentum and that’s up!

Also, the German ZEW data is due. Historically that is a big number, but in the current geopolitical environment, it may be overshadowed.

Put both releases together and we could see a solid move on EURGBP.

North American Session

This session will be lively as per usual with Trump the x-factor causing all the disruption.

Outside of Trump, we have some solid numbers to work with.

We have US Housing starts, industrial production & capacity utilization as well as Canadian Manufacturing sales data.

The problem at the moment is traders don’t know ‘exactly’ where to look for direction. Is it the data, equity markets or Trump?

So although these releases are market movers I’m going to be playing it safe and reducing my trade size just until I feel comfortable that Trump has said all he has to say…for now! (As clearly he will never truly shut up).

Trade with the market (i.e. momentum), that’s the aim of the game at the moment.

Technical Set Up – What’s Happening with the Majors

Today’s Fundamental Drivers

Plan the Trade, Trade the Plan!

The idea of our “Market Insight” is to give you some guidance with your daily preparation.

Your Daily Analysis needs to become habitual – For full guidance on our daily routine click here.

Make sure you don’t waste unnecessary time in front of the screens.

Remember you need to be fresh, confident and ready to trade and by sitting aimlessly in front of your screens you will become stale and uncertain.

The key to your success: Isolate the opportunities that work for you and focus on them.

Don’t worry about things that you can’t make…..chasing them will only cause problems (tiredness & irrational behavior will take over).

Tune up your charts & get ready to trade…..see you in the 247 Trade Zone!

Brad