Trader Talk

USDX: 94.45

Dollar Index essentially unchanged around the 94.40.

USDX may trade in more restrained ranges this week ahead of the Retail Sales data & Headline Inflation for the USD this week.

We are very likely to a breakout either side, rather than narrow trading ranges.

USD JPY: 113.65

Dollar-Yen saw wild volatility last week as the USD see-sawed with the sentiment sands shifting.

USDJPY has suffered at the hands of USD selling, caused directly by the delay in the US Tax Reform, which still seems like it will not get through at all, in its current form.

The BOJ commentary this week may not move the Yen sentiment at all, but the US data, particularly if we get a solid headline inflation read on Thursday sure will.

USDJPY is trading midway at a familiar price bracket, but expect breakouts later this week.

EUR USD: 1.1650

Euro did get a lift last week after support was found at 1.1580, but the upside was capped under 1.1680 as I mentioned in the technical commentary last week.

I am watching the Bund yields closely for the possible spark to fire up this EURUSD pair, but with the US 10-year treasuries trading back to 2.4% to close off last week, the EURUSD is in a battle.

The Fed Funds Futures are still pricing the US Rate hike around 97% for December, so we are set for a volatile week with the headline tier 1 data on the USD side this week.

A move higher is what I can see ahead.

GBP USD: 1.3125

Sterling came under pressure this morning on the Asian open as the UK PM is under pressure and political concerns drag on the currency.

The 1.3100 handle as held firm for now, but a breakdown of the 1.31 level will likely open the door for a fast move to 1.3050 or just below.

Expect pressure and a move lower in the London session today.

AUD USD: 0.7650

The Aussie came down slightly after weeks release of the quarterly Monetary Policy Statement, showing some downwards revisions.

Once again, the RBA commentary referred to the higher AUD hurting the growth story, but we have heard that line for a long time now.

The Aussie will spike higher if the US CPI misses the estimates at all (or if Retail sales data misses badly) as the December US rate hike is almost fully priced in.

NZD USD: 0.6920

The NZDUSD is holding just above the 69c price area against the USD after a slide off recent highs after the NZ election.

What the RBNZ did change this week, that was significant, is the overnight cash rate outlook (forward guidance) which was the hawkish reason behind the jump higher and it has held onto those gains.

The door is wide open for a snapback higher but needs a US data miss on CPI to spark up that direction.

More likely in the coming month ahead is a stock market sell-off spiralling risk off and the Kiwi moving towards 6750.

USD CAD: 1.2690

Dollar-CAD slowed right down to close off last week just under the 1.2700 handle.

Over the mid-term it still looks a great trade to consolidate higher from here, but the Oil rally has been very supportive for CAD lately, but Friday was a very narrow trading band.

I cannot see an end in sight for the Oil rally (towards $60) so expect USDCAD to be a little restrained in the 1.2650-1.2750 range, but also the Gold price this week will move CAD sentiment also.

USDCAD may have bottomed out around 1.2680 in the short-term.

VIX: 11.29

US Stocks finally showed a sign of cracking lower overnight, spurring up the VIX higher.

This could be the beginning of a serious & significant correction in US Equities.

The US Tax Reform in its current form, it very unlikely to provide a result for Team-Trump, so the potential for US Stocks to give back some of this year’s gains is very high.

Expect the VIX to trade higher looking towards 13 or even 15 over the next 6 weeks.

GOLD: $1,276.50

Gold saw a nasty jolt lower on Friday by about $10 with a large Sell order dumping the price sharply.

The USD will be looking for the Inflation data this week so we may see $1300 or $1250 but more likely no real breakouts in my view.

The extended timeline on the US Tax Reform will add a lot of buyers to Gold.
Watching that story very closely.

Short-term a bounce back is very likely, as I favour the Gold price to come back based on the US rate hike being almost fully priced in already.

OIL (WTI): $57.10

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

The continuing story around OPEC planned production cuts, particularly from Russia & Nigeria, was a big driver for Oil price rally, but it seems that the Saudi political upheaval is also seeing bids higher in Crude and WTI prices.

Price action suggests that higher highs will maintain, towards $60, despite the soft close on Friday.

BITCOIN (BTC): $5,930

Bitcoin traded back off 7900 levels extremely sharply, dumping about $2,000 after the planned BitFork was cancelled.

Crypto investors shifted gears into the long Bitcoin Gold trade, and that traded vertically at the same time as Bitcoin itself slammed lower.

CME Futures & ETF for Bitcoin are both also coming soon so my call of $7,500 by year-end is very much in play, even though we are now sitting sub 6000 I can Buyers racing in at these levels.

The easyMarkets MetaTrader 4 platform now has Bitcoin, with Fixed Spreads and Guaranteed Stop Loss orders.

Macro Themes in Play

• US Tax Reform is a big story, the pushback in timeline will hurt USD. Looking to CPI data
• GBP May come under increasing political pressure and see short term knee-jerk moves
• US Equities interesting, VIX finally moves higher as we approach key USD Events