Market Snapshot:

CAD: Technically the weakest single major currency so far this week due to bad numbers on Tuesday. Trade balance came in less than expected at -0.9bn versus 0.2b. However the biggest shock came from Ivey PMI at 46.3 versus 55 expected. A reading below 50 suggests industry contraction and this is the lowest reading since Feb 2011.

USD: For decades the US has banned the export of Crude exports but due to the increasing output from Shale, the Alaskan senator has called to lift the ban.

The taper has been the main talk of the markets leading up to the festive season, since then the FED has reiterated they will proceed to taper with caution, in hope of calming any market fears of tapering too soon.

AUD: Building approvals came in at -1.5%, less than the expected -0.9%. Retail sales beat expectations of 0.5% with a 0.7% reading. After rallying +16 pips within the 1st minute and reaching a daily high of 0.8912, price has sold off back near the release levels with the overall tone unaffected.

GBP: All 51 economists polled on the GBP interest rate this month believe the BoE will keep interest rates unchanged. Currently trading at 4 year highs against CAD and and 12 months highs against CHF.

Daily Insight

EURUSD: Completed 5-wave down? Favour correction up to 1.365

As expected, EURUSD has continued to ricochet between the pivotal level of 1.365 highlighted yesterday and the lower trendline. Indeed this may continue up until the NFP release, which is causing my bias for a corrective move back up to 1.3650.

Today I noticed a 5-wave move down from the 1.390 highs which (if correct) would then require a corrective move against it. As we have respected the support around 1.356 which comprises of the trendline and Monthly S1 I favour the outlook we have seen the end of a 5th wave and for a correction up to 1.365 to take place.

In the event we break beneath 1.365 then next target remains 1.350.

EURUSD

Nikkei 225: Providing a lead for USDJPY?

The Yen (single currency) and the Nikkei 225 have an inverted correlation as Investors appetite for risk shifts between 'risk on' and 'risk off', which causes a shift in the money flow between these two markets. Add to the fact that USD is considered a safe haven currency, and USD and JPY are net importers and exporters (respectively) then it begins to explain why the Nikkei 225 and USDJPY have a highly correlated relationship.

If you trade either the Nikkei 225 or the USDJPY then you can benefit by monitoring both markets.

Below is the chart of JPN225 (Nikkkei 225 derivative) with USDJPY overlaid in purple. WHat I am trying to highlight how JPN225 is hovering above a trendline and pivotal S/R level, which if broken, may provide a lead to go short on either JPN225 or USDJPY (assuming it follows suit).

USDJPY

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