Market Action

USDX: 93.75

Dollar Index crunched lower as USD sold down in overnight trade.

USDX may trade lower still as the rate hike in December is fully priced in, opening the door for disappointment.

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

That has already begun, look for lower lows.

USD JPY: 113.10

Dollar-Yen saw wild volatility yesterday, taking a sharp move lower towards 113.00 as the USD sold off aggressively.

The risk-off theme dominated the early London session, causing the pull-down in USDJPY, which has followed through in early Asian session dealing today.

USDJPY is likely to make a ruin lower still but needs to break key resistance at 112.80 firstly.

EUR USD: 1.1790

Euro came alive after very solid German & Italian data hit the newswires in the London session yesterday.

I can really see a snap higher and run up above 1.1850 from here as the USD sell down may not be done yet.

I am watching the Bund yields closely for the possible spark to fire up this EURUSD pair, and the sharp moves yesterday indicate just how quickly the EUR can run up towards 119 or 120 with a US Tax Plan disappointment very possible.

The Fed Funds Futures are now pricing the US Rate hike around 100% for December, so we are set for a volatile week with the headline tier 1 data on the USD side this week, possible USD disappointment.

Look for breakouts, coming soon in my strong view.

GBP USD: 1.3135

Sterling came under pressure very sharply on the Monday morning open of trade after the weekend reports out of London regarding the PM May’s lack of support.

The dip down below 1.31 extended as low as 1.3060, before GBPUSD bounced back fast.

Ass the USD fell out of bed yesterday GBPUSD continued its bounce higher to 1.3180 before getting back to 1.3135.

A move back under 1.31 looks very likely this week unless the USD really disappoints.

AUD USD: 0.7580

The Aussie was absolutely crunched lower, straight through supports on the back of the wage data miss earlier in today’s Asian session.

Looks like getting towards 7530 before settling down.

The China Industrial Production plus Retail Sales data were a very slight miss, but still solid, but AUDUSD was hit hard amid risk off moves the past two trading days.

NZD USD: 0.6870

The NZDUSD is under pressure, being offered quite firmly in the Asian session open today.

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

That move looks like it has kicked off already, with NZDUSD very weak today, heading towards 6850, hovering on the 6875 trendlines.

USD CAD: 1.2745

Dollar-CAD has really been quiet compared to other major FX pairs.

The USD wants to sell down, as the US 10-years sell don, but the CAD got a lift from higher Gold levels overnight too.

USDCAD may have bottomed out around 1.2680 in the short-term, and can squeeze towards 1.2800 this week easily.

Let’s see how its price action performs at 1.2750, a turn lower or acceleration higher. Both are possible!

Oil was crunched overnight which doesn’t support the CAD at all, helping to lift USDCAD higher.

VIX: 11.59

Vix is gaining ground, slowly but surely. More to come to close out this year, in my view.

This could be the beginning of a serious & significant correction in US Equities, and we had a risk-off theme overnight lifting VIX.

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: $1,282

Gold lifted back towards $1,283 with the risk off flavour in full flight last night.

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 into Gold – I certainly favour long positioning in GOLD looking for $1,300.

My Weekly Outlook video for easyMarkets called GOLD (long) as a key trade idea for this week ahead.

OIL (WTI): $55.13

Oil has seen a great deal of upward momentum shift strong Bids higher the past week or so but the production projections into next year has turned that momentum on its head.

Price action suggests that we may consolidate around the $55 level for now, ahead of tonight’s US Crude inventories data.

BITCOIN (BTC): $6,890

Bitcoin traded back up VERY sharply after the capitulation over the weekend and to start this week.

Crypto investors have raced into the bargain levels, and we are now aiming for $7,000 quickly.

CME Futures & ETF for Bitcoin are both also coming soon so my call of $7,500 by year-end is very much in play, with (upward) momentum growing fast, again.

I remain very bullish towards $8,000 price target, over the next 2-3 weeks.

Macro Themes in Play

• Euro playing out sharp USD sentiment shift, Bid to 1.1800.
• Risk off tone accelerated, as was the Bitcoin price recovery
• USD very heavy ahead of crucial risk events