Trader Talk

USDX: 93.10

Dollar Index had a wild Friday evening US session which was headline driven 100%.

The US Tax Reform has passed the first huge hurdle in the US Senate, with a vote in favour 51 to 49.

This can still fall over at the next stage, but it is far more unlikely to.

The biggest risk to the USD is the Flynn FBI probe and testimony relating to Trump’s direction & involvement regarding meeting Russian diplomats during the US Presidential Election, late last year.

The Flynn story and the possible ramifications of President Trump’s stability was why the USDX collapsed below 92.50.
A move back towards 93.50 looks very likely early this week.

USD JPY: 112.75

USDJPY was sold off aggressively on Friday as the Flynn probe story rocked the USD Sentiment.

The bullish momentum collapsed sharply, along with USD, across the board, dragging USDJPY from a steady flow around 112.70, down through Stops under 111.50.

The low on Friday ended up being 111.35 and the sharp reversal was caused by the US Tax Reform vote getting passed.

I think the US Tax Reform story can outweigh the political issues dragging on the USD, so I expect the 113 level to reappear very soon.

EUR USD: 1.1870

Euro price action on Friday and to open today was quite similar to other major FX pairs against the USD.

The first wild move was sharply higher, seeing EURUSD taking on the 1.1930 level before a nasty reversal.

The USD seems totally in the driver’s seat now for this pair, as we look for more USD Buying supporting the US Tax Reform progress in the Senate.

Until we get more headlines surrounding the FBI probe into Russia’s involvement with Donald Trump, we are likely to see EURO consolidate against the USD around 11850.

GBP USD: 1.3470

Sterling is supported by Brexit progress and is the major FX pair leading the pack currently, by far.

My research points towards the Brexit deal being 90% done, which means higher highs are expected in the sterling and the sterling cross FX pairs.

I maintain my target of 1.3600 for GBPUSD particularly as the USD can see more wobbles if markets/traders become overly concerned regarding Donald Trump’s involvement into the Russian meddling for the US Election.

I can’t believe that we are still talking about that story 1-year later, but such is the slow-moving investigation saga.

Essentially the UK have agreed to the huge Euro based divorce settlement figure, but we need confirmation from the EU side to see a run up towards 1.36 or even higher.

Watch for the GBPJPY to possibly resume the strong uptrend also.

AUD USD: 0.7600

The Aussie jumped sharply higher, ion a pure USD Selloff move on Friday – seeing AUDUSD print fresh recent highs around 7640.

The Sellers faded that AUD rally very quickly and on Friday the AUDUSD level drifted back to Earth, namely 7600.

Then came the String USD moves as expected form the US Tax Reform passing the Senate, seeing Aussie Gap lower today and find support on the 7580 level.

Tomorrow we have the RBA, widely expected to sit on their hands, so look for another move back under 76, taking a run perhaps lower than 7550 after the RBA statement is digested by traders.

NZD USD: 0.6860

The NZDUSD took the lead from AUD spiking higher sharply as the USD fell out of bed.

The slide in Kiwi-Dollar towards 6820 should resume now that the USD is BID again.

The NZDUSD seems capped under 70c firmly, so I am looking for a move towards 68 flat, to end this year as the US raise rates later this month.

USD CAD: 1.2715

Dollar-CAD was grinding higher then absolutely collapsed on Friday, back from 1.2900 to 1.2680 support.

Some buying interest has kicked in and we are above the 1.2700 handle again, but only mildly.

Wednesday US Session sees Crude Oil numbers follow the Canadian Interest Rate announcement, so expect a recovery back around 1.2750-1.2780.

VIX: 11.43

US Stocks were lifted through the 2660-benchmark level on the SP500 futures this morning after the weekend news of the US Tax Reform.

The VIX lifted off the lows but only mildly. More upside potential that is quite possible.

This is set for a break very soon, so look for much bigger trading ranges in the coming fortnight as the Headlines roll through regarding Trumps Political saga re Russian meddling into the 2016 Election.

GOLD: $1,274

Gold ripped higher as USD was crunched in NY dealing on Friday.

No surprise that the cause is the optimism around the USD outlook had crushed GOLD back towards 1275 to open this week, after the Vote was a success in the US Senate.

The trading range for Gold has been volatile, but still capped under $1,300.

This can go either way, so be nimble, but I prefer the upside on a possible USD disappointment out of the political jitters.

OIL (WTI): $58

Oil is holding $58 despite a move to 58.90 to close off last week.

I maintain bullish bias for WTI looking for a breakout to $60 but may not see that this week, unless the US Crude numbers are supportive.

Price action suggests that we may consolidate around the $58 level for now, still looking to spike higher to end this year towards $60 or even higher on the OPEC headlines relating to planned production cuts agreement continuing form last week.

BITCOIN (BTC): $11,450

Bitcoin has seen a very volatile price action over the past two days after hitting the record $11,400, but is now looking far more clearly bullish.

The CME Futures coming on a likely start date of 18th of December is the big catalyst here, as this development allows for the Institutional money to get into standardised Futures BTC trading.

Crypto investors are likely to keep buying pressure, seeing a new target of $13,000.

Look for another run up and more fever pitch buying this week ahead in my view.

Macro Themes in Play

• US Tax Reform gets past US Senate and US Stocks sharply Bid Higher (SP500 to 2,660)
• GBP Lifts quickly as Brexit headlines roll through, more upside is very possible
• Gold back off highs as the US back in fashion on the US Tax Reform vote.