Trader Talk

What Happened on Wednesday > Top 3?

• USD dragged lower after interim US jobs data miss
• Mixed Fed Speaker Commentary hurts the USD also
• Euro screams to 1.1900 taking out Dec 2014 highs

Outlook

• Aussie Trade Balance – Key for AUD Slide or Uptrend to resume
• Services PMI data for UK then BOE rate decision

Data & Event Risk Today?

• (AUD) Aussie Trade Balance – 11.30am Sydney.
• (GBP) Services PMI & BOE Rate Decision / Carney Speech– 6.30pm & 9/9.30pm Sydney.
• (USD) US Jobless claims – 10.30am Sydney.

USDX: 92.80

Dollar Index dipped lower as FOMC speakers delivered mixed commentary in relation to the number of remaining rate hikes for 2017.

The 10-year US treasuries dipped down slightly, dragging on USDX but a small recovery was seen to end the US session where we started the day around 9280.

USDJPY: 110.70

USDJPY had a very volatile day of trade yesterday dipping to lows around 110.20 before being Bid up to 111 and holding most of those gains to end the US session.

With Trump giving the Wall Street Journal an interview talking about the USD being too high, plus rumblings around Russian sanctions and potentially a war of words with China over trade as punishment for North Korean lack of involvement, all spells potential pain for the USD.

The geopolitical rumblings will take a backseat to the looming NFP US jobs report on Friday. The interim data was a slight miss, which is not normally a direct assurance that the headline numbers will be, so be careful on USDJPY.

EURUSD: 1.1845

Euro spiked higher beautifully last night to reach a fresh 2 ½ year high against the greenback around 1.1910, on the back of mixed FOMC commentary referring to 1 or more rate hikes out of the US for this year.

The retreat this morning to open the Asian dealing session, back to 1.1840 is a great entry to be positioned for potential USD pain ahead leading into tonight’s US jobless claims data release.

I maintain my view of 1.2000 in the very near-term.

GBPUSD: 1.3220

Sterling has had a mixed data week so far with good and bad PMI data Tuesday & Wednesday night respectively.

The fact that the cable has held the 1.3200 handle is a great sign of the strength of GBPUSD and potential for more upside.

This pair can scream higher if the US jobs data isn’t a resounding beat of analysts estimations so it is best to be Long now and have ambitious targets around 1.3300 as I said yesterday.

AUDUSD: 0.7935

The Aussie dollar has slid lower from those highs above the 8000 handle, persistently across all three trading sessions yesterday.

This move may be the start of a slide towards 7880 as I have been saying since Monday, as markets are starting to absorb the RBA stance in that they “will not raise rates in line with global peers”.

The idea of Trump starting a trade war with China does nothing to help the Aussie rally, but we are yet to really see that heat up. For mine, I feel that this sharp rally is overdone and ripe for pullback. I am playing the same tune looking for a move under 7900.

NZDUSD: 0.7397

The NZD was ripe for a pullback as I called since Monday, and we weren’t disappointed.

Kiwi crunched lower on the Asian open today fuelled by soft dairy trader’s numbers overnight and the big miss on the Jobs data for NZ yesterday morning.

The Kiwi-Dollar rallied sharply, alongside the AUD so this pullback was natural and expected and 7350 looks very likely from here now that I have seen the full breakdown of Kiwi Jobs report.

USDCAD: 1.2580

USDCAD recovered again yesterday, grinding higher through last week’s high around 1.2560, signalling that a bounce is coming.

The USDCAD needs the US data to be solid or on par to continue its recovery higher (towards 1.2750) but there is no guarantee that the US data will be solid.

I am staying with this downtrend looking a resumption towards 1.2500.

VIX: 10.28

Stock market frenzy hit fresh all-time highs again last night, on the back of Apple’s bumper results seeing Dow futures hold 22,000.

I love the long VIX trade looking a stock market correction anytime soon, although I have been saying that for a few months. It is just a matter of time (and patience).

GOLD: $1,264

Gold had a vicious spike down at the Asian session open this morning seeing $1265 dive to $1257 before recovering back up to 1264!

That is wild and can only be attributed to a massive dump on profit taking most likely.

As normality resumes Gold is likely to be a great BUY here for moves towards $280/1290 on the NFP jobs release assuming the US data prints lower than estimates.

Oil (WTI): $49.50

Oil has recovered nicely after the sharp sell-off seen on Tuesday.

From the charts I am not convinced that the uptrend is kicking in again, in fact, I can see a turn lower back towards $47 back in the familiar $43-$48 range once more.

Macro Themes in Play

• Fed speakers mixed, dragging US Treasuries slightly lower
• US Political rumblings continue to drag on the USD, with EURUSD benefitting most
• Markets want to race in and buy USD at these lows but are waiting for the NFP tomorrow.