My Trade Ideas

• EUR/USD: long at 1.1355, take profit at 1.1580, stop-loss 1.1255
• USD/CAD: short at 1.3350, take profit at 1.3010, stop-loss 1.3485
• AUD/USD: long at 0.7145, take profit at 0.7350, stop-loss 0.7050

Market Overview:

EUR/USD: Financial markets have been ahead of the curve in their worries over the Eurozone growth outlook, and have reduced significantly their view on lift-off this year. Draghi used the December meeting to explain that he viewed market expectations as focused on a thinking that the economy will worsen but importantly "they well understood our reaction function". While the market’s focus is on the date-dependent nature of forward guidance, Draghi is likely to emphasise the state-dependent aspect. It is too early to adjust rate forward guidance, but if it happens it should not be a complete surprise. The ECB meeting this week is likely to have a mild dovish tilt as the ECB focuses more on downside risks to growth but is still unwilling to officially shift risks to the growth outlook which will likely remain “broadly balanced”.

Investors expect a dovish statement from the ECB this week. But in our opinion, it is too early to a significant shift in ECB policy and the EUR/USD is likely to appreciate if the ECB is less dovish than expected. We opened EUR/USD long at 1.1355 today.

GBP/USD: British workers' pay growth hit a new 10-year high and employment grew by much more than expected in the three months to the end of November, as the labor market remained robust despite other signs of an economic slowdown ahead of Brexit.

Average weekly earnings, including bonuses, rose by 3.4% on the year, the Office for National Statistics said on Tuesday, the biggest rise since mid-2008 and compared with a median forecast of 3.3%. Excluding bonuses, earnings rose by an annual 3.3% in the three months to November. Adjusted for inflation, total pay rose at the fastest pace for two years.

Employment increased by the largest amount since the three months to April, although it is unclear whether businesses will maintain hiring at these levels as uncertainty around Brexit mounts.

British Prime Minister Theresa May sought to break a parliamentary deadlock over Brexit on Monday by proposing to seek further concessions from the European Union on a plan to prevent customs checks on the Irish border.

With little time left until the United Kingdom is due to leave the EU on March 29, there is no agreement in London on how it should leave the world’s biggest trading bloc and a growing chance of a dramatic ‘no-deal’ exit with no provisions to soften the economic shock.

Still, the Bank of England has said it will need to raise interest rates gradually to offset inflation pressures from the labor market.

The GBP rose on Tuesday after strong employment data suggested Britain's labor market remained robust despite an economic slowdown ahead of Brexit.

The GBP/USD remains above the 7-day exponential moving average. The pair broke above the 50.0% Fibo of September-January fall and the next hurdle is 61.8% Fibo at 1.2970. We stay sideways despite bullish signals coming from technical analysis. Short-term moves are unpredictable and the pair could be volatile due to uncertainty over Brexit.

USD/CAD: The Canadian dollar weakened against the USD as investors worried about progress on trade talks between the United States and China and after the International Monetary Fund cut its world economic growth forecasts.

The IMF predicted the global economy would grow 3.5% in 2019 and 3.6% in 2020, due to weakness in Europe and some emerging markets, and it said failure to resolve trade tensions could further destabilize a slowing global economy.

China's economic growth cooled slightly in the fourth quarter from a year earlier as expected, weighed down by weak investment and faltering consumer confidence as Washington piled on trade pressure, leaving 2018 growth the weakest in 28 years. Canada exports many commodities, including oil, so its economy could be hurt by a slowdown in the global economy.

The decline for the loonie comes after data on Friday showed a pick-up in December in Canada's annual inflation rate but stable underlying price pressures that could forestall additional interest rate hikes from the Bank of Canada over the coming months.
Canadian retail sales report is due on Wednesday.

We used today’s rise to get USD/CAD short at 1.3350, in line with our strategy. In our opinion the corrective move of January drop is coming to an end – the pair is currently near 38.2% Fibo of January move (1.3365).