Friday Market Action

Daily Trader Talk – Friday 21^th July.

What Happened on Thursday > Top 3?

> ECB chief Draghi’s comments flagging a QE taper discussion in September

> EUR/USD clears 2016’s 1.1616 range top, despite ECB’s statement

> Headlines on Mueller Russia investigation into Trumps business hit the USD

Outlook

+ RBA Speakers today in the Asian session will be key for AUD

+ EURO Longs may take profit leading into weekend

+ Trumps political rumblings linger, dragging on USD

Data & Event Risk Today?

• (AUD) RBA Assistant Governor’s speak – 1.40pm> Sydney.
• (CAD) CPI & Retail Sales data 10.30pm Sydney

USDX: 94.15

The Dollar Index took a hit lower again in the US session overnight as the latest rumblings surrounding Trumps business ties with Russia make for a new wave of investigation.

USDX took a hit from 95, jawboning straight down to 94 before a minor bounce.

USDJPY: 111.90

Bank Of Japan extended their outlook inflation target for a sixth time, dragging USDJPY lower from daily high of 112.40 back to 111.50.

The USDJPY pair is likely to extend losses in the coming week as the BOJ offered nothing new, but the USD woes are real and obvious.

I am looking for a move towards 111.00.

EURUSD: 1.1620

Euro took off after a small blip back to 1.1470 on the back of ECB Draghi’s commentary during their press conference.

His comment that financial conditions were still supportive of hitting the inflation target boosted the EURUSD straight up to 1.1600, as I called earlier this week (a target of 1.1615) in fact to a high around 1.1655.

I expect some profit taking to drag EURUSD back to 1.1600, then the upside push to resume towards 1.1700.

GBPUSD: 1.3055

Sterling traded in a very interesting range yesterday, firstly Offered down from 1.3000 to 1.2930 before a bounce higher.

These moves lower were despite the solid Retail Sales data released in the London session and also despite the USD being Offered on the news that Trumps business ties to Russia will continue to be investigated.

The GBPUSD officially became difficult to read last night but overall, I feel that the soft inflation data will weigh the pair down to 1.2850/1.2880 level.

AUDUSD: 0.7940

The Aussie dollar is in for an interesting day, with multiple RBA speakers out this afternoon in a “which way will they talk the Aussie” move.

We will either see 0.8050 or 0.7900 later this afternoon depending if the RBA speakers wish to talk about concerns that a high Aussie dollar drags on rebalancing OR if they wish to reiterate the warning to the markets that a rate hike is imminent.

The AUDUSD is happy at 7930/7950 for now but likely to see a firm direction later today in the Asian session.

NZDUSD: 0.7408

The NZD was well Bid as the USD came off last night.

That move saw NZDUSD push from 7340 to 7410 before resting just at the 7400 handle.

The Kiwi seems comfortably in an uptrend whilst it holds above the key 7350 after a huge run from May lows around 6830.

Stay with the trend towards 7500.

USDCAD: 1.2590

USDCAD moved lower overnight as the USD softness drove this pair under the 1.2600 handle.

The oil price story was reasonably unchanged and we do have CPI for Canada this evening to kick off the US session, so look for a bounce back towards 1.2700 if that Inflation data is a miss.

That looks like the trade of the day today as profit taking can move USDCAD back up to 1.2650 on its own, let alone the outlook for CAD based on CPI later.

VIX: 9.58

Volatility Index still sub 10 and unchanged again in overnight trade.

The fear index is remarkedly low despite the political uncertainty surrounding the Trumps presidency.

GOLD: $1,245

Gold jumped back up to 1245 purely due to USD selloff.

The potential for more of this to come is HUGE. Stay LONG Gold to $1,250.

Oil (WTI): $47

Oil made a run up to 47.55 before getting hit back under $47.

A grind to $48 will inevitable happen and then we may take a run at $50 once again.

Macro Themes in Play

• ECB commentary was pretty clear for the EUR bulls
  • Aussie Dollar rips higher and looks like easily taking out 80c

Trumps political rumblings are not good for USD, but great for Gold.