Friday wrap...

MARKET NEWS

 

As with last week and much of the month so far, the biggest mover across the board has been the Japanese Yen. This week was no different as long awaited positive economic data hit the markets along with positive comments from both political parties. The biggest surprise was Japan's October Industrial Output which rose 1.8% (down 4.1% in Sept vs expectations of a further 2% fall for October). Strong comments from political ministers and the Bank of Japan regarding beating deflation also helped depreciate the Yen. In turn, the Nikkei rallied and is potentially due a breakout considering how underweight the index has performed in relation to global stock indices. Most currencies rallied against the Greenback as positive news from Greece buoyed risk assets. The release of another round of aid for Greece, sent the Euro higher. EURJPY benefited the most as traders position strength against weakness. Elsewhere in Europe, UK GDP came in as expected at 1.0%. However, news of the newly appointed Bank of England Governor Mark Carney (ex-Governor of Bank of Canada) sent the British Pound higher. Even in late week trading risk assets benefited as the White House released details on a compromise on US taxes, helping their fiscal cliff situation.

 

TOP 5 TRADES OF THE PAST WEEK

 

1. EURJPY Bullish Engulfing Bar Long 28.11.2012 Support is found at the 4hour 50ema and 38.2% Fibonacci retracement at Y105.50. The price action reversal bar confirmed the move and resulted in +2%

 

2. USDCAD High Test/Hanging Man Candle Short 26.11.2012 Resistance is found on the 60m chart at 0.9953, including a horizontal support cum resistance level, 50ema and 61.8% Fib retracement which resulted in +2%

 

3. USDCAD Double Top Short 28.11.2012 60m chart Resistance is found at 0.9953. RSI divergence and the High Test/Hanging Man Candle confirmed the move lower which resulted in +2%

 

4. AUDCAD High Test/Hanging Man Candle Short 30.11.2012 60m chart Resistance is found 1.0360, the 50% Fib Retracement and the 50ema. Whilst this trade is still running it is currently up +1%

 

5. AUDCHF Double Top Short 28.11.2012 4hr chart Resistance is found at 0.9750, along with the 50% Fib Retracement level. RSI divergence confirmed the move lower as well as price action reversal bar. This resulted in +2%

 

EFFECT OF THE NEWS LOOKING FORWARD

 

Next week represents the last month before the start of 2013 so we may some repositioning of portfolios coming into year end. Key news announcements are the RBA Rate Announcement on Tuesday where a 25bps cut is expected, however, they disappointed the market on the last statement so watch price action after the release. We also have key news announcements regarding central bank policy from the UK, US, EU and New Zealand. The last Non-Farm payroll news announcement on Friday may set the tone to any fiscal cliff situation left come year end.