Trading Week Ahead

What Happened on Friday > Top 3?

• US GDP Data spins USD lower
• North Korea tests another Intercontinental missile
• Gold trades higher as safe-haven flow accelerates

Outlook

• RBA Rate announcement tomorrow
• Bank Of England rate announcement on Thursday
• Non-farm Payrolls Friday will be very pivotal to Rate Hike expectations

Data & Event Risk Today?

• (AUD) China Manufacturing PMI – 11am Sydney.
• (EUR) Eurozone CPI – 7pm Sydney.

USDX: 93.15

Dollar Index had a tough week and Friday was no different.

The major catalyst was the US GDP data but it didn’t help that North Korea tested yet another intercontinental missile with concerning range capabilities, plus the US 10-year yields moved back from highs of 2.33% to 2.29%, dragging on the USD.

USDJPY: 110.55

USDJPY saw another move lower on the safe-haven Yen buying to finish last week, coupled with softness in the USD across the board.

Like I said on Friday, look for 110.50 after hovering above the 111 handle for most of the London session on Friday.

This week is make or break for USD Longs which may get flushed out if Friday’s jobs report sees an uptick in Unemployment (which I don’t think will happen) or a less than stellar new jobs added number.

EURUSD: 1.1755

Euro reversed all of Thursday’s pullback and headed higher again as the USD fell out.

I can see the uptrend resuming from this level as the bull’s rush in for a fresh run towards the 1.1800 handle this coming week.

EURUSD strong weekly close is indicative of what I have been seeing for a while, namely, the potential for EURUSD to run up towards 1.2000 as the US Fed disappoints with their constant pushback of timeline of normalisation policy.

GBPUSD: 1.3145

Sterling ended the week solidly, just barely making it to my 1.3150 target on the back of USD softness.

Thursday sees a Bank Of England rate announcement which is still likely to produce no change in rates but the upside potential for Sterling seems possible.

It will be interesting to see the BOE inflation report as that will be a great indicator of just close to target the UK are in possible rate hikes in the remaining quarters.

AUDUSD: 0.7985

The Aussie dollar had a strong close to finish off last week, helped by the US yields dipping.

As per last week’s comments: “AUD will likely take a breather around 0.8000 for now, leading into RBA on Tuesday. “

We know that the RBA won’t move on interest rates on Tuesday, considering last week’s commentary & soft inflation data, but I feel the Aussie may be ripe for a pullback, with risk sentiment being challenged by North Korea’s challenge to global patience.

Look for a move towards 0.7880 before the US jobs report (Friday).

NZDUSD: 0.7515

The NZD powered through the 7500 handle last week to highs around 7565, before retreating.

The momentum in this uptrend remains very strong leading into the Kiwi jobs data on Wednesday morning. The estimates suggest a mixed result for employment data but the USD side of this story may be the bigger driver. Look for price action to move towards 7450.

USDCAD: 1.2460

USDCAD finally popped back up after many trading session finding lower lows, then the US data hit and USDCAD slammed back to 1.2400.

At the same time the Canadian GDP was solid plus Oil found its way to $50, both helping the USDCAD move from 1.2575 to 1.2415.

USDCAD is trying hard to bounce which displays to me just how oversold it is, however the fundaments all point to lower lows for USDCAD. A strong US Jobs report on Friday will propel a sharp spike back to 1.2600, but a miss will mean we are finishing this week at 1.2400.

VIX: 10.29

The VIX finally traded higher and certainly now looks like a breakout far higher is imminent, helped by North Koreas war games.

Watch this space, the markets are about to pop. This is the week to be poised!

GOLD: $1,270

Gold sprung to life and sprung to 1270 as the risk off theme plus the lower US yields drove strong Bids in Gold from 1263 to 1270.

More to come, I love LONG Gold right now and can see a move towards 1,300.

Oil (WTI): $50

Oil has had a solid trading week and turned very positive technically.

Can it break through $50, that is the question? The new questions is, will it turn lower now or keep going?

As per last Friday’s comment: “The headlines are helping Oil recover and I think that we will see $52 by (this) week.”

Macro Themes in Play

• USD Lower on lower Yields, GDP data, North Korea headlines plus also failure of healthcare in Washington.
• Treasury yields recovered dragging USD higher, evident across the major pairs.
• EURUSD zooming higher along with Gold as safe have flows are strong.