<span style="text-decoration: underline;"><strong>1. INTRODUCTION:</strong></span>

Only on Thursday this week did I feel that I was back to 100% after having a "Flu" for the past five weeks. Therefore, as a result next week I will be fully engaged on Twitter and trading.

A very interesting past 5 days of trading. It was a Central Bank extravaganza with four or five reviewing interest rates. If that was not enough there was also U.S. Non-Farm Payrolls release that could potentially be a game changer.  Do not be surprised to see lines of Financial Executives around Lower Manhattan to be precise, buying toilet issue in vast quantities as they will be sitting on the loo for most of the next few weeks hoping that uncle Ben from the FED does not pull the plug on QE early and raise interest rates. If you trade equities, I would say that Andrex and Scotties....in fact any bathroom toilet tissue manufacturer would be a good long, and, if you live near Wall Street stock up!!

I heard six denials from either Central Bankers, Prime Ministers or Finance Ministers this week, regarding the subject of currency wars.......interesting. I think that it is only themselves who actually believe what they are saying.

The EUR/USD was absolutely stuffed/smacked/handed it's butt yesterday. The previous day, following Draghi's press conference it rose to 1.3100 , then at the close last night it was once again hovering at 1.3000. The mere fact it only retraced to 1.3100 on Thursday was significant, given that Draghi eluded to the fact that the ECB sees  1.3500 as the going rate in 2013. On Thursday 1.3100 was a very small move upwards all things considered,  this meant that it could have been prime for a fall back and theU.S.  jobs report yesterday delivered the numbers to chop it back.....in style.

It's a debate at the moment between the GBP an the EUR for which one is more down the toilet than the other. I think that Cable has it, at the moment,  the fundamentals are so bad its heading for low 1.40's even mid 1.30's in my eyes. The EUR is not that much better. 1.2900 will offer good support on any down side move, but if that level gives way it is in danger of heading to the low 1.20's to test bottoms before maybe pulling back.

I have written about this so many times but the divergences are now huge between equities and the Forex market. The AUD/USD is still not rising in line with the S&amp;P 500. In fact, the AUD/USD is close to a very important level 1.0220.

So, in the coming weeks watch the correlations closely. I am not calling a top in equities, but we cannot be too far away now. The move lower if the FED talks about pulling the plug later this year, will be  a good percentage correction. Remember the FED is pouring 85 billion dollars a month in support to the US markets while the numpty politicians in Washington are quite happy and content to  bicker and waste time over party political issues, ignoring what is good for the country. A move lower could be passing them by before they realise what is happening...then they will focus on who to blame for an equity pullback, even though the economy may be improving.

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<span style="text-decoration: underline;"><strong>2. THE VIEW FROM MY TRADING DESK:</strong></span>
<p style="text-align: center;"><strong>LET THE FED QE EXIT DEBATE BEGIN....RELEASE THE BEARS!!</strong></p>
So, yesterday's Non Farm payrolls numbers have created a whirlwind in the media. There are quotes, mis-quotes, in fact, a bevvy of analysts have crawled out from under rocks to appear on Bloomberg and CNBC to compare Presidential performances on unemployment and debt statistics to those going back as far as Jimmy Carter. Holy Crap what's going to happen if next month's NFP is a good number as well....CNBC will need paramedics on standby!

OK....it was a number that beat estimates, but my God, the U.S. is working off numbers that are as questionable as the China data releases. How many hundreds of thousands of people are there in the U.S. that have stopped claiming benefits (because they can only claim for a limited time) and have therefore  fallen off the radar as far as unemployment numbers are concerned?  What is the true unemployment rate? No-one knows....lets be honest, it's got to be closer to 10%, rather than the 7.7% quoted yesterday as the official numbers.

Moving to the actual numbers, a positive monthly change of  236,000 newly employed people beat the estimated 162,000 by a country mile but the U.S. allegedly needs 250,000 a month net increase just to keep pace with new entrants to the labour market and these numbers as previously mentioned ignore the drop off rate of previous claimants. So they are not accurate.

Now, I think that Ben Bernanke is not just the most powerful man in the world but he is also intelligent and he knows these numbers are fudged. The debate over future FED action has begun. Will they.....won't they....... announce a reduction in the monthly QE support . When Ben announced that he would support the markets to 85 billion dollars a month, it was initially seen as QE to infinity....not anymore...... the debates on exits have started.

Before we get all "beared" up and short anything that moves, Bernanke is not stupid, and, I think he will try to calm things down by saying that the unemployment target is still some ways away, but he may have to elude to maybe the end of 2013 as the time that if the conditions are right that he pulls back a little. He is playing with dynamite, and, this was always going to be a most interesting subject at the appropriate press conference, when it happens that is, and the subsequent market reaction that follows will be volatile to say the least. This however will not stop the insatiable desire by the media and bloggers like myself to talk about it way ahead of time.

As an Fx trader all I will say is that the disconnect between Forex and Equities has already begun and this correlation, or lack of it, is probably only going to continue for the time being.

There will be previously caged bears foaming at the mouth ready to break out as soon as the negative sentiment enters the equity markets..... just beware. We are entering another period of uncertainty, and, the equity markets, in particular, do not like uncertainty. Volatility is ahead in the Fx market and we love volatility....happy days.

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<span style="text-decoration: underline;"><strong>3. MY LONG TERM TRADES:</strong></span>

I do not have any at this present time.

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<span style="text-decoration: underline;"><strong>4. LOOKING INTO THE NEXT WEEK  - THE KEY SUPPORT AND RESISTANCE LEVELS WITH THE USD MAJORS:</strong></span>

<strong>EUR/USD: Closing Price 1.3003.</strong>  Very bearish events twice this past week for the EUR/USD. We close the week at 1.3000. We look like we will be heading lower in the coming weeks. It will not be a straight line but we now have FED issues, the uncertainty over the Italian election, although the debt costs of Spain and Italy seem to be on the back burner for the present time but they will be back!! This week 1.3150 to the upside will be what is needed in my opinion to change away from the bearish tones. Down side support is huge at 1.2900, then 1.2850. If we really start to see this pair pressured I think we may be ready to re-test 1.2635 at some stage in the coming weeks. Please remember this will not be a straight line decline. We will swing up and down on the way lower.

<strong>GBP/USD: Closing Price 1.4916.</strong> Winning the most ugly pair in the market prize, the GBP/USD. I know that Cable has the reputation of going on the equivalent of a forex bender by flying off in the opposite direction to even the heaviest of trends, but this time it is so far down the crapper it has to fall much lower. All the UK fundamental news is so poor, how this pair isn't below 1.4500 already beats me. I have a long term target of below 1.4000 with this pair for 2013. It is soooooooooooooooooooooo poor. For this week however,  to change the bearish mood/sentiment, in my opinion we will need to see a break back to 1.5200. If we do this it will offer a great short and "Thank the Lord" at the same time for the gift! Downside support is initially at 1.4880; 1.4750 is below that and then 1.4500. If we break below 1.4500 this week my below 1.4000 belief will come into play a lot earlier than I thought.

<strong>AUD/USD: Closing Price 1.0230.</strong> We closed just 10 pips above crucial support that we toyed with most of yesterday. Downside support at 1.0150. This was important some time ago but now I believe it to be minor as the big cheese will be at parity. Upside 1.0300, then 1.0360 are resistance levels.

<strong>NZD/USD: Closing Price 0.8215.</strong> If we take out 0.8200...I think the opportunity to go a lot lower lies in front of this pair. The Interest Rate decision coming up next week will be crucial for this pairs future direction. Sentiment is bearish along with the Aussie. Short side support after 0.8200 is 0.8140 and then 0.8000 looms on the horizon.  To the long side, 0.8250 then 0.8350 will offer good resistance.

<strong>USD/CAD: Closing Price 1.0282.</strong> Great data from Canada yesterday took the Loonie lower with CAD strength. It did pull back with USD strength during the day and once again looks like its ready to test 1.0300. Play the trading range. The range to break  is 1.0200 to 1.0350.

<strong>USD/CHF: Closing Price 0.9507.</strong> We are above 0.9500 at the close. I think the EUR/USD has the potential to fall away next week and therefore as it drops the USD/CHF will rise. I think 0.9750 is a reasonable target to look at on the way back to parity. 0.9450 and then 0.9380 will offer good support to the downside.

<strong>USD/JPY: Closing Price 95.95.</strong> I do not know how to play this pair; apart from not to stand in front of the freight train..... This pair looks like it still wants to move higher although it has had difficulty at 96.50. The BOJ is on a mission. I would once again just play the range, 94.50 to 96.50.

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<span style="text-decoration: underline;"><strong>5. THE NEXT WEEK'S MAJOR FOREX NEWS EVENTS THAT INTEREST ME:</strong></span>

In comparison to the week just completed not as much coming up on the docket in the next 5 1/2 days.

WEDNESDAY: NZD - Interest Rates and RBNZ Pres Conference.

WEDNESDAY: AUD - Employment Change/ Unemployment Rate.

FRIDAY: USD - Core CPi Data.

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<span style="text-decoration: underline;"><strong>6. FINAL COMMENTS AND CLOSING THOUGHTS:</strong></span>

We are once again facing yet another period of uncertainty. This is not the time to be a hero. Do not try to pick either a top or bottom in the market. The moves if sentiment starts to change will be very large and therefore as a  Fx trader just take a chunk out of the middle of the move, trust me there are heaps and heaps of pips available without trying to be a super hero. Wait for the move confirmation, then set up your trade, and move stops as needed to protect your profits. We may not be at this stage yet although look closely at the Aussie and Kiwi which are at lows of the day and then look at the Dow Jones and S&amp;P, highs and new highs. Divergence is the word.

Trade with smaller positions and with wider stops to cope with any volatility.

Good Luck.....

Scott Pickering
The Pip Accumulator
Saturday 9th March 2013

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