Trader Talk – Cut Through The Market Noise

USDX: 93.35

USDX was mixed overnight but was lifted ISM Non-Manufacturing data being a solid beat of expectations, which is a very bullish signal to me of underlying economic strength.

The Fed is still expected to lift interest rates in December, now priced at 75% probability, which may see higher highs in the Dollar-Index over the near term, in my view.

I can see a bounce higher but perhaps we get down to 93.00 firstly, fuelled by covering leading into tonight’s set of event risk with unemployment data for the US before the headline US jobs data tomorrow.

I am seeing a breakout soon through that key 95 level but we need a Hawkish Fed Chair story to fuel that USDX rally.

USD JPY: 112.70

USDJPY was very mixed in overnight trading sessions, but there is a support structure in the charts at 112.50.

This move can be attributed to Short covering leading into the Non-Farm headline jobs numbers this week, very common nervous moves in USDJPY before the data hits, in case the USD data is a disappointment.

Interim Non-farm payroll was on par which gives me a great deal of optimism for the headline numbers.

Support seems strong at 112.50 and may be tested if that headline data is less than expectations.

I still lean towards moves towards 114 particularly with the Hawkish Kevin Warsh being the frontrunner for the race for the next Fed Chair place to be announced over the coming two weeks.

EUR USD: 1.1760

Euro very quiet in Wednesday’s dealing session as ECB Draghi’s speech provided nothing new.

With no Eurozone data remaining on this week’s calendar, this pair is driven by the USD sentiment.

The QE unwind will be in focus again in the coming weeks and traders will position for that accordingly, so watch the daily range to change for EURUSD remarkedly as we get a clear path for the next US Fed chair and timeline out of the ECB.

How do you play it in spot FX? Look for a breakout of 1.1680 on the downside before getting to excited to follow this pair lower.

GBP USD: 1.3240

The Sterling is in a dangerous slide to start this week, crunching lower amid Brexit negotiations dragging on.
The support at 1.3250 kicked in this morning in the Asian market open and a drift higher saw 1.3270, but the short-lived nature of that move spells more downside is likely to follow.
I feel that a move to 1.3150 will happen this week as we see a run of Tier 1 UK data – starting with Services PMI data tonight, after the London open.
BOE Governor Carney did talk up the GBP but it failed to lift the GBP.
That is a large signal of GBP weakness, so the slide may continue towards that 1.3150 area unless the data supports a massive turnaround.
The Daily charts certainly point lower, but anything is possible in NFP US data week for the new month.

AUD USD: 0.7830

The RBA did little to lift the prospects for a move higher in Aussie rates, keeping their tone in the RBA statement almost identical to September.

The Aussie has seen a gradual slide lower, from 8100 amid the USD strength in the market.
Today’s Retail sales miss is another factor of energy waiting to play out in this pair moving lower, but the markets have not yet fully reacted, seeing AUDUSD 7830.

The next moves for the US fed are likely to be a lift in rates in December, and markets have not waited to price that into the fair value of many FX majors, AUD being no exception.

“I think the RBA will HOLD rates, so the AUD may find its way towards 7780 before bouncing back…”
That proved to be spot-on correct yesterday.

Support and Buyers are likely to hold the AUDUSD level around 7830- 7850 leading into US Non-Farm payroll headline data at the end of this week.

A lot of stop orders may sit around 7750 so will be an interesting week for the AUDUSD if the US Jobs data is solid, seeing AUD slide lower once again.

NZD USD: 0.7160

An interesting start to this trading week so far for the Kiwi Dollar.

Bid up this morning in a USD move, back to 7185 from yesterday’s lows of 7145.

For NZDUSD we have seen a break below 7200 held to start this week, which is an ominous sign for Kiwi, in the short-term.

Yesterday it wiggled around 7150 levels led by USD sentiment, but this week will be more pivotal, with the headline US jobs data in focus.

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 is high.

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

USD CAD: 1.2480

Dollar-CAD came back under 1.2500 as BOC commentary lifted the CAD overnight.
The Oversold nature of this pair is enormous, so the USD buyers are getting positioned in this pair, but the rally last week was quite strong so a move back was always possible.
Markets didn’t disappoint, selling USDCAD back under 1.2470 in early Asian dealing today as fresh speculation on Trumps Fed chair nomination just hit the newswires.
If we see a miss in NFP data on Friday that will help support a turnaround back towards 1.2400.
I prefer to play on the long side of USD this week, so look for 1.2600 particularly as the FOMC & Janet Yellen may once again, lift the USD, leading into NFP, setting the backdrop for more buyers potentially to step in.
A huge miss in the headline Jobs data will see a pullback towards 1.2400.

VIX: 9.63

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 now into the last Quarter, so look for moves in US Equities possibly fuelled by profit taking after the rally again overnight seeing VIX lower, US equities Higher!

GOLD: $1,274

Gold has slid lower the last three trading days amid USD renewed strength and the markets shrugging off the continuing war or words from the North Korean issue.

I would prefer to say that the USD will win this battle thus crunching lower lows for Gold over the coming week.

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 1280 in case hedging occurs for a weaker US Payroll data number this week.

We can never write off more NoKo headlines dragging Gold back up towards 1300, always possible too.

OIL (WTI): $50.00

Oil saw a big turnaround and profit taking, to slide back off last week’s highs overnight.

The OPEC commentary in relation to production cuts should have been more supportive, but markets bought SP500 wildly, sold Oil just as much back to $50.

Now that we have seen a rest at the $50 price, Oil will look towards US Inventories data for sentiment & direction this week.

Will the buyers step in at 50 looking for another run up above $52?

Very possibly Yes.

BITCOIN (BTC): $4,230

Bitcoin has traded strongly towards the $4,500 handle before a profit taking drift back, mirroring the USD pullback yesterday.

Quite a bullish signal back in this market as traders shrug off the recent negative headlines about Bitcoin exchange bans in China & South Korea.

Where to from here?

Momentum looks solid again, on the Upside towards $5,000+.
That seems like a huge call, but not with this market, buyers love a bargain.

Bitcoin is trading LIVE now on the easyMarkets proprietary Web platform, so your live charts will display all of the usual goodies for technical analysis.

Be careful, can be extremely volatile.

Macro Themes in Play

• USD seems poised to breakout awaiting key US Jobs Data
• Speculation about next Fed chair is moving the USD sentiment re: Rate Hike Outlook
• AUD looking heavy after worst Retail Sales data in 4 ½ years