MARKET NEWS
After strong rallies against the Greenback last week, markets consolidated in a whip-saw trading week. Patience and holding your nerve was definitely necessary this week! Whilst most traders digest US earnings reports, the resurgence of EURCHF skewed currency correlations. UK CPI came in as expected at 2.7% and US Retail Sales fared a little better at 0.5% against 0.2% expected. Arguably, the key data this week was China GDP which came in as expected at 5.7%. However, this represents the slowest growth period in 10 years. Subsequently, the Australian Dollar fell due to their import/export relationship. Elsewhere in Asia, comments from BOJ and government policy makers supported the Yen as they look to work towards a 2% inflation target. The Yen depreciated against all its counterparts, continuing its 3 month rally.
TOP TRADES OF THE PAST WEEK
1. USDJPY – 16.01.2013 4hour chart – Support is found at 80.00, the 50ema and 61.8% Fib retracement. The low test bar confirmed the move higher resulting in +2%
2. NIKKEI225 – 17.01.2013 – Support is found at the daily 20ema. The morning star reversal pattern confirmed a move higher resulting in +1.5%
3. Coca Cola (KO) – 14.01.2013 – After bouncing off multi year lows t $36, the higher low was confirmed by the low test bar. This trade is still running currently up +1%
4. EURUSD - 14.01.2013 - Resistance is found at the 200 weekly MA and 1.272 Fib extension. Price action and indidcator divergence suggested a move lower. I'm still holding the trade short, even though it's spent more time in the negative than the positive! The trade is now around a break even level. Patience is key!
EFFECT OF THE NEWS LOOKING FORWARD
Next week’s Bank of Japan Monetary Policy Statement will be very key as tough talk from political leaders on a 2% inflation target will now be put to the test. Their press conference will also highlight key levels on which they will support the Yen further. German ZEW on Tuesday will also be key as traders look for hard evidence to support recent comments from ECB members that the Euro is now out of danger. The Canadian Dollar has a big week as BOC Rate Statement and CPI data is released. As always, be careful of intra-day volatility and always follow price action as a leading indicator.
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