Trader Talk

USDX: 93.00

USDX made it to highs around 93.50 before taking a pullback to 93.

Her comments set the backdrop for USD strength plus Trumps Tax Reform plans help give weight to the long Dollars trade, even though we saw some month-end profit Taking yesterday.

Essentially Janet Yellen is pushing the idea of a Rate Hike for the US in December and seems to be pushing hard for that to happy with a small disclaimer on the inflation target of 2%.

Watch for higher highs on USDX in the coming weeks as we stare down the barrel of Non-Farm payroll data for the US next week too.

I remain quite Dollar bullish, particularly as Janet Yellen has signalled her intentions fairly clearly to the Dollar traders this week, despite the profit taking/pullback that we saw overnight.

USD JPY: 112.60

USDJPY was capped at 113.25 midweek and turned south to see a move back to rest at the 112.55 level in NY dealing overnight.

I must say, there was no real driver here barring profit taking on the 3 day USD rally plus the doubts creeping into whether the Trump tax reform details are worthy of a rally in risk & USD.

The USDJPY story is one with momentum building fast even though this pullback occurred in overnight markets, it makes for a better entry assuming the USD bulls get back into this pair leading into next week’s headline US jobs data.

Possibly a good chance to be positioned in this pair beforehand. I still target 114 by next Friday for NFP, potentially.

EUR USD: 1.1785

Euro took a hit back under 1.18 mid-week, but sharply recovered in a major USD reversal yesterday, bouncing off its lows around 1.1715.

Traders don’t seem too convinced though because it has stalled again here in the early Asian session around the 1.1780 level, seeing some obvious resistance at 1.1800.

The big driver is also the German election results being a little unclear, plus the big rally in the USD.

I can see a mild move higher potentially today in EURUSD towards 1.1850 before settling down to end the week.

I won’t be surprised if we see some buy EUR buying leading into next week’s key risk events as the ECB QE timeline still needs clarification but EURUSD may seem cheap at these sub-118 levels.

GBP USD: 1.3420

The Sterling drifted around a little directionless in yesterday’s dealing sessions.

Theresa May’s speech did little to hurt or lift the Sterling, as it came back from weekly highs around 1.3450 to settle back to 1.3420 as we opened here in Asia today.

As the Brexit process rolls on and drags on the reality is that the USD sentiment has a big influence in GBPUSD levels.

Tonight, we have Current Account data for the UK just after the London open and also BOE Governor Carney6 speaking during the US session, so expect much more volatility in the latter session!

BOE Governor Carney may talk up the GBP and may lift it back to 1.3500, that is how I see things playing out this evening.

AUD USD: 0.7840

The Aussie has been quite wild this week, coming down swiftly from recent highs, with only a 50-pip bounce yesterday on USD selloff.

The RBA get the chance on Tuesday to perform a hawkish Interest rate hold and lift the AUD, if they choose to.

I think the RBA will move on rates, but not necessarily on Tuesday coming (next week) so the AUD may find its way towards 7800 before bouncing back.

That is not an outrageously wild idea considering it was down 2% this week, touching off lows yesterday around 7795.

Support and Buyers are likely to hold the AUDUSD level around 7830 to end this week, from my analysis.

NZD USD: 0.7215

The NZ elections this past weekend was unconvincedly won by the Nationals, but not enough to govern outright, dragging NZD lower to start this week.

Uncertainty for a week or so will likely drag NZDUSD lower, but we have seen levels below 7200 already this week, which is an ominous sign for Kiwi, in the short-term.

Yesterday it bounced back higher, as did all major FX pairs against the USD, in a reversal across the board, lifting NZDUUSD back to 7230.

NZDUSD is likely to benefit and get back up off the canvas when the Election results are clearer, but in the short-term, it seems that this pair is getting Offered because of the USD strength in the market.

Ranging between 7250 and 7160 looks likely in the coming week leading into key US jobs data next Friday.

USD CAD: 1.2445

Dollar-CAD was not surprising seeing some profit taking in US dealing as the USD slid lower after the treasuries led a minor sell down.

The FOMC delivered for the USD bulls so USDCAD lifted towards 1.2500 but fell back as the USD softened in overnight dealing, to see lows of about 1.2415.

If we see a miss in GDP data on Friday that will help support a bounce back for USDCAD in the near-term, above 1.2500.

1.2500 or even higher particularly as the FOMC & Janet Yellen may once again, lift the USD, leading into NFP week next week.

Until we get a breakthrough above 1.2515 the Average weekly range seems limited to 1.2400 -1.2600.

VIX: 9.55

The volatility index is holding stubbornly under that 10 level, which is normally a great signal of big breakout moves to come.

Janet Yellen has highlighted this week that the Fed are on track to lift rates again for the US in December, but the fear gauge seems more interested in the progress of Trump and his Tax reform plans.

I am still in favour of the markets turning on this Trump trade – which means selling out of this enormous Stocks rally towards the last quarter of this calendar year.

We are a whisker away from October, so look for moves in US Equities possibly fuelled by a miss of Trumps Tax Reform spurring an unwind in Long equities, which will spike VIX much higher.

GOLD: $1,287

Gold has had a volatile week this week, after sharp moves higher and a massive slide back sub-1300.

I would prefer to say that the USD will win this battle thus crunching lower lows for Gold over the coming week. To what levels? Possible towards 1280 and then settle down.

It is almost unbelievable to move up from 1294 to 1313 and then back to 1280 in one week, but such is the USD sentiment currently.

The positioning in GOLD levels will change over the coming few trading days as we approach NFP’s, so watch for a move back to 1286 in case hedging occurs for a weaker US Payroll data number next week.

We can never write off more NoKo headlines dragging Gold back to 1`300, always possible too.

OIL (WTI): $51.60

Oil found very solid support for the most part until more headline risk dragged WTI prices back from the +$52 levels.

How the Turkey situation plays out will be key in the short-term for Oil, but I still favour moves above $52 to form a base for a potential drive higher in prices.

I maintain my view that upside may be capped at $55, so I am happy to be on the sidelines for Oil at the moment.

Let’s see how the WTI price action closes for the week, I would say anything is possible around 51.50 – 52.00.

BITCOIN (BTC): $4,100

Bitcoin has traded softly on Thursday after being solidly Bid from $3700 to about $4250 earlier in the trading week, as we called.

Where to from here?

Momentum can be seen in the 4-Hourly charts, but we have seen already today in early dealing a pretty quick pullback from 4200 to 4100, which is a dangerous signal that we are set for a soft close to today.

Bitcoin trades non-stop so I will not be surprised if by Monday we are at about $3900
Be careful, not for the faint-hearted.

Macro Themes in Play

• USD Slides off weekly highs after Tax Reform plans fully dissected
• Quarter ends with some profit taking, USD looking ahead to next week
• Euro still struggling to break the 1.1800 barrier after German election results drag on.