Trader Talk Tuesday

USDX: 94.60

Dollar Index was off by 0.3% overnight as dollar softness was the main market theme to start this week.

USDX may trade in more restrained ranges this week ahead of next week’s US Inflation data release.

It does look heavy and may trade down to 94 before finding support.

USD JPY: 113.75

Dollar-Yen spiked up through orders to see a high around 114.75 yesterday before a sharp retreat.

The BOJ tone today on the newswires was the catalyst for a move to 113.60 in London dealing yesterday.

Looks very undecided if it will regain the 114 handle, or turn lower amid a risk-off move while Donald Trump departs Japan and head to South Korea.

USDJPY has often come back fiercely led by the Bond markets after a nasty slingshot move like we saw yesterday, so I remain Bullish short-term.

EUR USD: 1.1615

Euro made a mild move higher to start this week, essentially still hovering around the 1.16 level.

The slide back to 1.1600 is an ominous sign for the EUR against a strengthening USD, and the fact that the USD softness yesterday only cause a 15-pip blip higher shows the weakness in EURUSD.

I would have to favour a move back to 1.1500 for EURUSD now that the US payroll data is supportive enough for the December rate hike for the US Fed, hurting EURUSD bulls.

GBP USD: 1.3170

Sterling recovered last week’s losses very nicely yesterday, jumping off lows to find its way back to 1.3150.

This was a common USD softness story playing out as the GBPUSD was far too oversold last week.

The recovery sees GBP back around key level but I am doubtful it can achieve the 1.32 handle, so look for a gentle and settled move to rest around 1.3150 leading into Janet Yellen’s speech tomorrow and the UK data on Friday.

AUD USD: 0.7695

The Aussie had a rough, rough week last week, taking out key supports under 77c and barely recovering that level to start this week.

The key 7730 level should hold up as a ceiling on a move higher, post RBA today.

RBA – Likely to hold Australia’s benchmark rates steady & unchanged which may see another small uptick before a run lower.

NZD USD: 0.6950

The NZDUSD got a solid lift back to 6950 as the commentary regarding the RBNZ stance was softened before the Asian open this morning.

The NZDUSD is likely to find Selling pressure again in the week ahead in my view but may lift towards 70c firstly before heading south after RBNZ this Thurs.

I am looking for lower lows to be the theme, towards year end, as the US raise rates in December the Kiwi will come under increasing pressure, towards 6800.

USD CAD: 1.2715

Dollar-CAD did a sustained slide lower across all session on Monday as the Oil price hit a 2-year high, and the USD slid.

This was because the USD was offered, plus the Canadian jobs data was strong on Friday, seeing some CAD buying coming in.

Over the mid-term it still looks a great trade to consolidate higher from here, heading closer towards the US rate hike next month.

In the short-term though, the Oil price rally will help support the CAD, and hold USDCAD around 1.2750-1.2800.

VIX: 9.40

US Stocks are holding up firmly this week ahead of the hugely important Trump visit to Asia.

Stocks maintained strong levels overnight, boosted by energy and Tech stocks, holding VIX sub-10.

Look for a breakdown in stocks before year-end, possible a large correction in my view, particularly as profit-taking may kick in.

GOLD: $1,280

Gold saw a solid uptick to start this week, purely on softness in USD.

Price action still seems fair value to me, as we are in a familiar range for gold, ping-ponging inside the $1,260-$1,280 range.

Expect a volatile fortnight ahead for GOLD as Donald Trump visits Japan, China & South Korea, where the North Korean issue may rare up once again.

Traders are looking ahead to the US CPI next Thursday, but expect the US to raise rates in December regardless, holding GOLD back to around 1250 to close off this year in my view potentially.

OIL (WTI): $57.25

Oil has seen a great deal of upward momentum shift strong Bids higher the past week or so.

Overnight it got over the $57 marker as Nigeria announced that the will comply with ongoing OPEC planned production cuts, hence Oil lifted to 57.30 as I have been calling.

Price action suggests that higher highs will maintain, towards $60.

There was Bullish price action to close off last week, as Oil takes on new territory with the Saudi Arabia chess moves going on.

BITCOIN (BTC): $7,105

Bitcoin ripped higher last week, but has shown signs of a pullback to kick off this week’s price moves.

The pullback/retreat was short-lived yesterday as we saw the 6900 level hold only very briefly.

The momentum has switched to be strongly bullish again but be careful because the upcoming Bitcoin fork is very likely to cause a jolt lower.

Watch for a jolt (lower) towards $6,000 in the coming week ahead.

ETF for Bitcoin is also coming soon so my call of $7,500 by year-end is very much in play, after getting over the hurdle at $7000 last week.

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Macro Themes in Play

• Oil lifts strongly above $57.25 as Saudi tensions run high
• GBP bounces back as USD Softness is the macro theme
• Dollar Traders looking ahead to December rate hike after whipsaws in USD