Market Action

USDX: 93.05

Dollar Index had a wild Friday evening US session which was headline driven 100%, but has steadied since.

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

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 on President Trumps stability was why the USDX collapsed below 92.50.

A move back towards 93.50 looks very likely early this week, but so far it is glued to the 93 level.

USD JPY: 112.50

USDJPY had a soft start to the week, opening strong as the US Tax Reform story was essentially over the weekend, but trading lower for most dealing sessions yesterday.

The support was found at 112.50 yesterday as we are drifting around that level as we speak, looking ahead to the NFP at the end of this week.

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, particularly if the US unemployment rate dips down to 4.0% as it is predicted.

EUR USD: 1.1865

Euro price action quiet to start this week, dribbling around the 1.1865 level amid no news so far for Brexit.

The USD seems totally in the driver’s seat now for this pair, but the Euro may get an uplift if the end of the week provides a clearer divorce path for the UK from the EU.

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 1.1850-1.1880.

GBP USD: 1.3475

Sterling did see some whipsawing price action yesterday to kick off this week with strong volatility on the back of Brexit headlines which suggested, “no deal as yet” from the joint press conference between UK PM May and the EU’s Junker.

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.

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, as well as GBPAUD.

AUD USD: 0.7600

The Aussie virtually unchanged from yesterday, hovering on the 76c handle ahead of the Current Account data this morning and the RBA interest rate announcement later this afternoon.

The Sellers will race into AUDUSD if the RBA comments of concerns around the Sydney & Melbourne housing/debt scenario but a lack of catalyst might see a small relief rally in the Asian session at least.

I favour the downside on AUDUSD to end this year around 75c as the US move on rates this month helping the Aussie lower as the Divergence plays out.

Don’t expect fireworks from the RBA today, likely to be more of the same.

NZD USD: 0.6865

The NZDUSD was quiet to start this week, as to be expected after the wild price action on Friday.

The RBNZ Spencer speaks shortly regarding Inflation so a larger trading range may be seen, but I am not expecting too many fireworks.

The slide in Kiwi-Dollar towards 6820 should resume now that the USD is BID again, and expect the RBA this afternoon to be the likely timing to see the Kiwi start to move.

USD CAD: 1.2675

Dollar-CAD did not start this week with a bounce back, instead it continued lower.

The 1.2670 level is a large support price area, and it is barely holding for now ahead of tonight’s Canadian data.

Some buying interest may kick in if the CAD data is a big disappointment, but looking very heavy on the longer-term charts.

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

VIX: 11.68

US Stocks came back off record levels, lifting VIX above 11.5 for the first time in a while.

More upside potential is quite possible leading into year-end volatility.

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: $1,276

Gold is holding around the $1275 price point ahead of this Friday’s US Payroll data.

The USD is still looking strong, now that the US Tax Reform has cleared the first BIG hurdle in the Senate.

The trading range for Gold has been volatile and looks likely to remain 1260-1283.

This can go either way, so be nimble, but I prefer the upside on a possible USD disappointment out of the political jitters for Team-Trump, PLUS the US rate hike is almost completely priced in.

OIL (WTI): $57.55

Oil came back under $58 as the estimated production from the US looks high.

I am still LONG OIL but can see a quieter trading range in the area between $57-58.50.

Price action suggests that we may consolidate around the $58 level for now, still looking for direction heading into next year’s Saudi Aramco planned IPO listing.

BITCOIN (BTC): $11,600

Bitcoin seems very bullish, drifting back up to all-time highs around $11,600.

The CME Futures coming on a likely start date of 18th of December (and CBOE starting next Monday) 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 still holding the USD firm, as 2-year Treasuries lift
• GBP volatile ahead of more Brexit headlines after meeting this week
• Gold steady & Oil softens up, but BITCOIN powers higher